We have compiled helpful answers into two groups for you:
- Quick Q&As with brief answers.
- Questions that require more detailed answers, of which we linked to their own pages.
Quick FAQs
If I am in a payment plan, will the IRS take my refund?
Yes. All refunds are taken to offset the balance owed until paid.
What is the IRS collection statute of limitations?
10 years from the date of assessment. If your 2018 return was assessed on June 1, 2019, the statute is June 1, 2029. There are several actions that can extend the collection statute. These actions extend the statute to collect because the IRS is prohibited from collection enforcement during the time of the action. For example, if a taxpayer files bankruptcy, an offer in compromise, or has a pending installment agreement, the collection statute is extended during these time period (plus a certain amount of time afterwards) because the IRS cannot enforce collection during these actions.
What happens if the statute of limitations to collect expires?
Simple – the IRS writes off the amount of tax owed. Taxpayers can confirm that old balances are written off by reviewing their IRS account transcript for the year in question.
How can I find out my collection statute?
First, each year is likely to have its own collection statute expiration date (CSED). If you owe for multiple years, there are likely multiple CSEDs. Also, if you have an additional assessment in a year (I.e. for an audit or underreporter notice), the new assessment will have its own CSED date. The only way to find out the CSED is to call the IRS and ask. Your online IRS account and IRS transcripts do not provide CSED information.
How can I find out how much I owe?
There are two ways to find out the payoff balance: Call the IRS and ask or go online to the IRS’ “view your tax account” application. Both provide payoff amounts. IRS account transcripts do not provide exact payoff amounts and can be misleading in certain circumstances.
How will I know if the IRS levied my bank account?
Your bank account will have a zero balance. The IRS does not notify you of the levy in advance. However, all is not lost. The bank does not send the funds to the IRS until 21 days have past. This allows the taxpayer to get into an agreement and request a levy release before the 21 days expire. Also, the bank only holds the amount of the money in the account at the time of the levy – all future deposits are not subject to the levy already issued.
How will I know if the IRS contacted my employer for a wage garnishment?
Your employer will let you know that they received the garnishment from the IRS. For wage garnishments, the employer will not send all of the paycheck to the IRS. Your employer will work out the amount excluded from levy with you before sending the amount to the IRS. One bad thing about wage garnishments- they are continuous until the amount of the balance owed has been paid. Taxpayers with wage levies will need to get into an agreement fast and request a wage levy release from the IRS.
How will I know if the IRS has filed a tax lien?
The taxpayer will receive Letter 3172 from the IRS after the lien has been filed with the taxpayer’s local courthouse. The taxpayer can also check their IRS account transcript to see if a lien has already been filed. The IRS normally files a tax lien when you owe more than $10,000 and are not in an extension to pay or streamlined installment agreement.
Will a tax lien hurt my credit?
It depends. Tax liens are no longer reported on credit reports. However, lenders may review lien databases (liens are public information) in evaluating your credit worthiness.
What happens if I ignore the IRS and my balance owed?
You run the risk of enforced collection – that is, a lien and/or levy. Also, if you owe more than $53,000 (adjusted annually each November for inflation), the IRS may send a notice to you and the State Department that you have seriously delinquent tax debt. The State Department can use this information to restrict, deny, or revoke your passport. Also, the IRS can send your account for private debt collection.
Are there fees to set up an agreement with the IRS?
Unless you meet the IRS low-income standards or are setting up CNC status, there is a user fee to set up an installment agreement (up to $225 if you pay by check each month) and to file an OIC ($186 application fee). Taxpayers setting up an installment agreement can reduce their fees by applying online and paying by direct debit.
How much should I offer the IRS to settle my taxes?
To qualify for an offer in compromise (a tax settlement), you must first determine if you can pay the tax owed with assets or future monthly payments before the collection statute expires. If you qualify, the IRS will want an amount that is equal to your reasonable collection potential (RCP). RCP is a computation based on your future collectibility. The taxpayer’s assets and monthly disposable income are key components in this computation as well as the offer payment method selected by the taxpayer.
With the IRS forgive the penalties and interest?
It depends. Penalty abatement is much more common than interest abatement. Penalty abatement can apply to certain penalties for the first year if the taxpayer has a clean compliance history (called first time abatement) or has “reasonable cause” to not complying. Interest abatement is usually difficult to qualify for. It usually requires that the IRS delayed processing of a request that caused additional interest to be owed. Otherwise, interest abatement is very rare.
What IRS phone number do I call to get into a collection agreement?
Taxpayers who need a collection agreement and are assigned to IRS Collection usually can call the IRS’ Automated Collection System unit at 1-800-829-7650 (wage earners) or 1-800-829-3903 (self-employed). Taxpayers who are not in IRS collection and want to execute a streamlined installment agreement can call the IRS at 1-800-829-3922. If the taxpayer is assigned to the Collection Field function (I.e. to a revenue officer), they will need to work directly with the revenue officer to obtain the agreement.
What IRS phone number do I call to get an offer in compromise?
All OIC applications are made in writing using IRS Form 656. Taxpayers who have questions about their OIC application can call the IRS Centralized Offer in Compromise unit at 1-844-805-4980. It may take the IRS up to 5 months to start work on your OIC application. Once the OIC investigation is started, the OIC examiner will provide you a phone number and extension to call to contact them about your OIC.
How many letters will the IRS send before they levy my account or garnish my wages?
If you did not have any prior issues with the IRS (multiple years that you owe), the IRS will normally send 5 letters before a levy is issues in this sequence: CP14, CP501, CP503, CP504, and LT11/L1058. The last letter (the LT11 or L1058) is the Final Notice of Intent to Levy. 30 days after that notice, the taxpayer can be levied.
How can I get the IRS to remove my tax lien?
Once a lien is filed, the taxpayer must pay the balance to remove the lien (I.e. get a lien release). The taxpayer can appeal a lien filing (up to 30 days after the lien is filed) if the lien will cause them hardship (i.e. lose their job because of the lien). Taxpayers can request lien withdrawal if they can pay their balance under $25,000 and get into a direct debit installment agreement. After three payments, the IRS will allow the taxpayer to request lien withdrawal.
Expanded FAQs
Click on any question below for a detailed answer.
- What are the solutions to IRS tax debt?
- Which IRS collection alternative is right for me?
- What is the IRS collection statute of limitations?
- What if I cannot pay the amount on the tax return?
- How long does it take to get into each type of IRS collection alternative?
- What is an IRS levy?
- How does a levy on an independent contractor’s income work?
- What is an IRS wage garnishment and how does it work?
- How do IRS passport restrictions work?
- How can I get a copy of my IRS account transcripts?
- How do I contact the IRS?
- Is there a correct way to request a collection hold?
- How can I send documents to the IRS if I don’t have a fax machine?
- Which IRS forms do I need to complete to get an installment agreement?
- What is the process to apply for IRS currently not collectible status?
- What are the IRS Collection Financial Standards?
- How does the IRS calculate my reasonable collection potential for an offer in compromise?
- What is the process to apply for an IRS offer in compromise?
- What’s important to know about using IRS Form 433?
- What is the IRS “Fresh Start Initiative”?
- When does currently not collectible (CNC) status end?
- What should I do if I defaulted on my IRS payment plan?
- What should I know when I am assigned to IRS field collection (i.e. a revenue officer)?
- What happens when my account is assigned to an IRS private debt collector?
- Can the IRS collection statute change or be incorrect?
- What IRS payment plans can I get into quickly and easily?
- How is the IRS ‘ability to pay’ installment agreement different from others?
- Do I qualify for an ‘offer in compromise’ with the IRS?
- Do I qualify for a ‘currently not collectible’ status with the IRS?
- How to obtain a streamlined installment agreement with the IRS?
- How can I request an ‘extension to pay’ with the IRS?
- How does the IRS calculate the amount of my monthly payment plan?
- What is the process for appealing an IRS decision?