Get your IRS account information and collection status from the IRS: there are 3 items to get from the IRS: balance owed information, collection enforcement status and deadlines, and compliance status. It helps to obtain your IRS account transcripts which show the assessments, penalties assessed, balances owed, and some account activity. However, it is usually necessary to contact the IRS and get specific information about enforcement activity and deadlines. Also, if you are not sure that you have filed all of your required past year’s tax returns, you will need to ask the IRS.
Evaluate whether you have enough time to avoid collection enforcement: if enforcement is imminent, it may be best to request an extension if there are other time-consuming steps involved in obtaining a collection agreement (like filing past due returns or evaluating options to pay). You can contact the IRS directly and request a collection hold or an extension to pay. If the taxpayer is already under a levy or garnishment, they will want to ask for a levy release in exchange for a deadline to comply. If enforcement relief is denied, the taxpayer will want to consider appealing the decision or moving quickly to get into an agreement so that the levy is released.
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Fix any immediate non-compliance issues: taxpayers cannot proceed to obtain a collection agreement without being both in filing and payment compliance. Filing compliance means that you have filed all required tax returns (for individuals, that is usually the current and past 6 years of returns). For payment compliance, the taxpayer will need to have enough withholding and/or estimated tax payments so that they will not owe again for the next filed tax return. The taxpayer will need to correct any compliance deficiencies before moving forward to a collection agreement.
Evaluate the best collection alternative based on your circumstances: several factors come into consideration including the taxpayer’s ability to pay, the amount owed (which will determine which options may not be available), and avoidance of collection enforcement. Taxpayers will need to evaluate their financial information in relation to the alternatives available.
Select your collection alternative – and complete the steps to obtaining the agreement: simple agreements like the extension to pay, SLIA, and 84-month plan can be executed quickly with very few IRS forms to complete. In many circumstances, the extension to pay and SLIA can be done online in less than 30 minutes. Ability to pay alternatives such as the ability to pay installment agreement, currently not collectible, and the offer in compromise require financial disclosure to the IRS. The taxpayer will need to prepare Collection Information Statements (Form 433 series) and other required documents to request these solutions. Likely, there will be multiple interactions with the IRS to answer questions and negotiate the final terms. Taxpayers will need to respond timely in this step to avoid enforced collection (I.e. a levy).
Finalize terms of the agreement and appeal any disagreements: the taxpayer will need to confirm (by IRS notice or by reviewing their IRS account transcripts) that the agreement was reached. If there are disagreements with the terms of the agreement, collection enforcement actions, or rejected OIC, the taxpayer may need to appeal to get a second review of their circumstances and proposed solution terms.
Complete the terms of the agreement: if the agreement is an extension to pay- pay before the due date or get into another collection alternative. If the agreement is a payment plan, make the payments each month. If the agreement is an OIC, complete the terms of payment and stay in compliance for the next five years. CNC status requires no further activity. If you had a levy in place, make sure the levy was released if that was in the terms of the agreement.
Stay in compliance and monitor future notices for action: be sure not to file/owe/not pay in future years. Any new unpaid balance will default to an existing installment agreement. Unpaid balances in the next five years will also default any approved OIC. Taxpayers who owe will always get an annual notice from the IRS outlining payments made and the outstanding balance owed. Any other notices will need to be addressed immediately to avoid default and possible enforced collection activity.
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If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
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