What To Do If You Receive an IRS Collection Notice

The thing you don't want to do if you receive an IRS collection notice is do nothing. This is a situation where you can run, but you can't hide. The IRS just has to many weapons to find you with. So, What To Do If You Receive an IRS Collection Notice?

First, find out what type of notice it is. There are reminder notices, there are intent to levy notices, but the most common one is a change to taxpayers form. This could be a addition error, missing information, proof of deduction, any number of things that the IRS wants to look at.

Steps You Can Take

If you filed the return yourself, then you must determine the complexity of the collection notice. If it's as simple as requiring documentation to prove a deduction, or something of that nature, you should be able to handle this yourself. If the request is more complex, then consider hiring a tax specialist to represent your case.

Read the collection notice carefully. The IRS is very time efficient in their different collection processes. A first time notice can have a deadline of 4 months, if you are given a final notice the deadline can be 30 days.

Whatever course of action you choose, always document everything. Names, times, conversation notes, anything you deem important to your collection notice.

If you receive an IRS collection notice for intent to levy, you have 30 days to act. The last thing you want is a freeze on your bank account or a garnishment on your paycheck. Once the IRS takes legal action and gets court approval for a levy, it is hard to reverse. The other thing is penalties and interest start adding up, it just gets worse if you don't take prompt action.

Other Options If You Receive an IRS Collection Notice

There is something called IRS debt settlement or offer in compromise. This is basically an agreement between you and the IRS for the outstanding balance due. It can be a reduction in principal owed, it can be a installment agreement or a combination of both.

Now you have several choices on what to do if you receive an IRS collection notice. You also know to do nothing is the wrong choice.

The IRS doesn't really want to take extreme actions, they only want their money. If they see you have a hardship case they will work out a settlement satisfactory to both parties. The sooner you address a collection notice, the more options you will have to solve it.