Question 1

If I am in a payment plan, will the IRS take my refund?

Accepted Answer

Yes. The IRS will apply your refund(s) to the balance you owe, until it’s fully paid.

Question 2

What is the IRS collection statute of limitations?

Accepted Answer

The collection statute of limitations is the 10-year period the IRS has to collect tax you owe. For example, if the IRS assessed taxes on your 2018 return on June 1, 2019, the collection statute is June 1, 2029. However, several things can extend the collection statute, so the IRS has more time to collect what you owe. For example, if you file for bankruptcy, request an offer in compromise (OIC), or have a pending installment agreement, the collection statute extends because the IRS can't collect your bill during these periods.

Question 3

What happens if the statute of limitations to collect expires?

Accepted Answer

Simple—the IRS writes off the tax you owe for that period. You can review your IRS account transcripts for the year(s) in question to see whether the IRS wrote off the old balances.

Question 4

How can I find out my collection statute expiration date?

Accepted Answer

The most effective way to find your collection statute expiration date(s) is to call the IRS and ask. Your online IRS account and IRS transcripts don’t provide this information. Keep in mind that each tax year is likely to have its own collection statute expiration date. If you owe taxes for multiple years, you probably have multiple collection expiration dates. Also, if you have any additional assessments (such as tax bills resulting from an audit or CP2000 inquiry), the new assessment will have its own expiration date.

Question 5

Can the IRS extend my collection statute expiration date?

Accepted Answer

The IRS may request an extension of your statute date for a specific period. The date is automatically extended in certain situations, including when you request a collection due process hearing, apply for an OIC, or file for bankruptcy.

Question 6

What happens if I miss the notice deadline to file my late return?

Accepted Answer

There are two ways to find out your payoff balance: Call the IRS and ask or use the IRS Online Account application. IRS account transcripts don’t provide exact payoff amounts and can be misleading in certain circumstances.

Question 7

Which IRS forms do I need to complete to get an installment agreement?

Accepted Answer

You can set up an installment agreement using one of two forms:IRS Form 9465, Installment Agreement Request, which you can file with your tax return to request a streamlined installment agreement and authorize direct debit payments.IRS Form 433-D, Installment Agreement, which you can use to finalize an approved installment agreement and authorize direct debit payments. You can't file Form 433-D with your tax return.If you owe less than $50,000 and can pay your tax balance within 72 months, you may be able to skip the forms and set up a streamlined installment agreement using the IRS Online Payment Agreement tool.If you need to set up a more complicated agreement, such as an ability-to-pay installment agreement or currently not collectible status, you will have to provide the IRS with a Collection Information Statement to review your financial information.

Question 8

How will I know if the IRS levied my bank account?

Accepted Answer

You’ll find that a hold has been placed on your funds (up to the amount of the balance associated with the levy). Fortunately, the hold remains in place for 21 days to allow you time to resolve your issue with the IRS before the bank sends your funds to the IRS. Also, your bank holds only money that was in your account at the time the bank received the levy. Any deposits you make within the 21-day period won't be sent to the IRS.

Question 9

How will I know if the IRS contacted my employer for a wage garnishment?

Accepted Answer

Your employer will let you know that they received a wage garnishment from the IRS. Your employer will be required to send a certain portion of your wages to the IRS while the levy is in place. Important note: Wage garnishments are recurring, so they’ll keep happening each pay period until you pay off your tax balance or make other arrangements with the IRS. It’s best to quickly set up an agreement and ask for a wage levy release.

Question 10

How will I know if the IRS has filed a tax lien?

Accepted Answer

You’ll get IRS Letter 3172, Notice of Federal Tax Lien, after the IRS files the tax lien with your local courthouse. You can also check your IRS account transcripts to see if the IRS has filed a lien. The IRS normally files a tax lien when you owe more than $10,000 and you haven’t asked for an extension to pay or set up a streamlined installment agreement.

Question 11

Will a tax lien hurt my credit?

Accepted Answer

It depends. Tax liens don’t appear on credit reports anymore, but lenders may identify liens through other databases, which can hurt your credit standing.

Question 12

What happens if I ignore the IRS and the taxes I owe?

Accepted Answer

You run the risk of enforced collection, such as a lien and/or levy. Also, if you owe more than $55,000 (adjusted every November for inflation), the IRS may send you and the U.S. State Department a notice that that you have “seriously delinquent tax debt.” Then, the State Department can restrict, deny, or revoke your passport. The IRS can also send your account for private debt collection.

Question 13

Are there fees to set up an agreement with the IRS?

Accepted Answer

Yes, unless you meet the IRS low-income standards or you’re setting up CNC status.The one-time fee to set up an installment agreement is up to $225 if you pay by check each month. You can reduce your fees by applying online and paying by direct debit.OICs carry a $205 application fee. OICs may require you to make payments with the application or during the OIC investigation depending on your circumstances.

Question 14

How much should I offer the IRS to settle my taxes?

Accepted Answer

To qualify for an OIC (a tax settlement) you first need to establish that you can't pay off your balance with your assets and monthly disposable income before the collection statute expires. If you qualify, the IRS may agree to settle your tax debt for less than you owe, based upon your equity in assets and future monthly disposable income.

Question 15

With the IRS forgive the penalties and interest?

Accepted Answer

It depends. Penalty abatement (or, forgiveness) is much more common than interest abatement. You’re likely to get abatement for certain penalties if you have a clean compliance history (called first-time abatement) or have reasonable cause for not following the rules. Interest abatement is difficult to qualify for. It usually happens only if the IRS delayed your request, causing you to owe more interest.

Question 16

What IRS phone number do I call to get into a collection agreement?

Accepted Answer

This depends on which IRS department is handling your case. Your IRS notice will usually be a good indicator of who is assigned to your case. If you are setting up a payment agreement with the IRS that is not an extension to pay or a streamlined installment agreement, you will always need to deal with IRS Collection.If you receive a notice saying your case is assigned to IRS Collection, call the IRS Automated Collection System unit at (800) 829-7650 (wage earners) or (800) 829-3903 (self-employed).If you aren’t assigned to IRS Collection and want to set up a streamlined installment agreement, call the IRS at (800) 829-3922.If the IRS assigned you a revenue officer, you’ll need to work directly with that person to get your agreement.

Question 17

What IRS phone number do I call to get an OIC?

Accepted Answer

You need to apply for an OIC in writing using IRS Form 656. If you have questions about your OIC application, call the IRS Centralized Offer in Compromise unit at (844) 805-4980. It may take the IRS up to five months to start to work on your OIC application. Once the IRS starts your OIC investigation, the OIC examiner will give you a phone number and extension to call to get information about your OIC.

Question 18

How many letters will the IRS send before they levy my account or garnish my wages?

Accepted Answer

If you don’t have any past issues with the IRS (like owing for multiple tax years), the IRS will typically send five letters before it issues a levy: CP14, CP501, CP503, CP504, and LT11/L1058. The last letter (the LT11 or L1058) is a Final Notice of Intent to Levy. The IRS can levy you 30 days after sending that notice.

Question 19

How can I get the IRS to remove my tax lien?

Accepted Answer

You can appeal a lien filing for up to 30 days after the IRS files it, if the lien will cause you financial hardship (like losing your job).Otherwise, you have to pay off your tax balance to get the lien removed (called a lien release).If you can pay your tax balance to less than $25,000 and set up a direct debit installment agreement, you can request lien withdrawal after three payments.

Question 20

Can you appeal a collection solution or collection enforcement disagreement?

Accepted Answer

Yes, there are three levels of appeal for collection disagreements. Each type of appeal works differently, and only the Collection Due Process hearing is subject to review by the US Tax Court.A manager conferenceCollection Appeals ProgramCollection Due Process hearing (if applicable)If the IRS rejected your OIC application, you can also appeal to the IRS Independent Office of Appeals.

Frequently asked questions about IRS collections