For most taxpayers, the mere thought of dealing with the Internal Revenue Service’s Collections division makes you want to crawl under a rock. The Collections branch represents the IRS’s enforcement arm – the team tasked with pursuing and retrieving unpaid tax debts through garnishments, levies, and property seizures. While indeed an unwelcome situation for any taxpayer, there are several common reasons why individuals and businesses, unfortunately, face Collections personnel.
Unfiled Tax Returns
One of the primary catalysts for the Collections division getting involved is failing to file required federal tax returns. Even if you cannot pay your total tax liability, filing on time each year is crucial. The IRS will eventually pursue collections enforcement for non-filers based on substitute returns and their income information.
Tax Debt Repayment Defaults
For those who do file but cannot pay everything they owe, Collections may initiate contact if established payment plans or installment agreements default. Missed payments or failing to adhere to agreement terms prompt the IRS to transfer the case to Collections to compel repayment through forcible means if necessary.
Audit Adjustments and Assessments
Tax audits that uncover underreported income or underpaid balances also frequently lead to Collections interventions. Once the IRS officially assesses additional taxes, penalties, and interest owed following an audit, outstanding amounts are routed to Collections to actively pursue payment.
Payroll Tax Deficiencies
The IRS takes businesses’ willful failure to pay payroll taxes properly extremely seriously and virtually guarantees Collection enforcement. Unpaid employment taxes are a major trigger for aggressive collection actions like levies and property seizures.
Lack of Response
The initial contact with Collections often stems from taxpayers simply not communicating with the IRS. Ignoring IRS notices or failing to respond to warnings about past-due tax debt adequately forces the agency to escalate matters to Collections personnel to compel resolution.
While facing the Collections division of the IRS is understandably concerning, being proactive about filing, pursuing payment plan options, and resolving outstanding assessments can help taxpayers avoid this fate. Communication and cooperation are the best defenses against the IRS’s aggressive collection tactics. However, once your tax issue reaches Collections personnel, their mission is enforcing payment through any means necessary – a burdensome prospect for any taxpayer.
If you are facing an IRS collection issue, schedule a call with me today to resolve your tax debt.
