Publication 594: The IRS Collection Process

Publication 594, titled "The IRS Collection Process," is an official document from the Internal Revenue Service (IRS) that explains the steps the IRS takes to collect unpaid taxes. It outlines the various options available to taxpayers who owe money to the IRS and their rights throughout the collection process.

What is the Purpose of Publication 594?

This publication aims to:

  1. Inform taxpayers about the collection process and the potential consequences of not paying their taxes.
  2. Explain the different options available for resolving tax debts, including payment plans, offers in compromise, and temporary delays.
  3. Outline taxpayer rights and protections during the collection process.
  4. Encourage taxpayers to come forward and work with the IRS to resolve their tax issues.

Who Should Read Publication 594?

Anyone who owes money to the IRS or anticipates difficulty paying their taxes on time should read Publication 594. This includes:

  • Individuals who have received a tax bill from the IRS.
  • Businesses struggling to pay their tax liabilities.
  • Self-employed individuals with outstanding tax debts.

What Happens When You Don't Pay Your Taxes?

The IRS initiates the collection process when you fail to pay your taxes in full and on time. Here's a breakdown of the typical stages:

A. Initial Notice and Bill: You'll receive a bill (notice) outlining the amount owed and the penalties and interest accruing.

B. Contact Attempts: IRS representatives may contact you by phone or mail to discuss payment options.

C. Increased Collection Activity: If you don't respond or make arrangements, the IRS may escalate collection efforts. This could include:

  1. Filing a Federal Tax Lien: A public record notifying creditors of your tax debt, potentially impacting your credit score.
  2. Levy: Seizing and selling assets (wages, bank accounts, property) to satisfy the tax debt.
  3. Summons: A legal order requiring you or a third party to provide information or appear for a hearing.

What are my options for resolving a tax debt?

Publication 594 outlines several options, including:

  1. Full Payment: Paying the entire tax debt immediately.
  2. Payment Plans (Installment Agreements): Setting up a plan to pay your tax debt in installments over time.
  3. Offer in Compromise: Negotiating a settlement with the IRS to pay less than the full amount owed.
  4. Temporary Delay of Collection: Requesting a temporary suspension of collection activity due to financial hardship.

What are my rights during the collection process?

Publication 594 emphasizes your rights as a taxpayer, including:

  1. The right to appeal an IRS decision.
  2. The right to be represented by an attorney, accountant, or enrolled agent during interactions with the IRS.
  3. The right to request a hearing before the IRS takes certain actions, such as a levy.

It's important to consult Publication 1, "Your Rights as a Taxpayer," for a detailed explanation of your taxpayer rights.