Owing money to the Internal Revenue Service (IRS) can be a confusing and intimidating process. Fortunately, you have the right to legal counsel and to have a qualified legal professional represent you in front of the IRS. When you contact Damiens Law, we can give you information about how to work with an attorney on your IRS collections case in an efficient and effective manner. Our experienced legal team can help you understand the entire IRS collection process.
If you need legal representation for a tax matter, consider contacting Damiens Law for a confidential consultation by calling (662) 442-4423 for our Mississippi office or the Tennessee office at (901) 499-4466.
Steps in IRS collections process
The IRS has broad powers to collect taxes owed to the federal government. The IRS can take one or more of the following actions to collect this debt:
Send notice of amount due
The IRS will send taxpayers a written notice that they owe taxes before initiating the collection process. This notice will include the following information:
- The amount due
- The date when the amount must be paid to avoid additional interest or fees
- Interest and other penalties that have been assessed on the account
If the taxpayer does not pay the amount due by the due date, the IRS will usually send another notice. This notice may indicate additional interest or penalties have been assessed on the account. The IRS might send three notices before it begins other collection activities.
One of the most powerful tool in the IRS’ arsenal is the ability to garnish a taxpayer’s wages. This process allows the IRS to receive money off the top of a taxpayer’s paycheck to pay down the owed tax debt.
In addition to garnishing wages, the IRS can also seize other forms of income or funds, such as:
- Tax refunds
- Personal winnings
- 401(k) accounts
- Savings accounts
However, the IRS cannot seize certain types of income, such as:
- Workers’ compensation
- Child support payments
- Certain types of welfare benefits
A wage garnishment can have a devastating impact on a taxpayer’s finances because they automatically lose a percentage of the income they need and are used to receiving.
Place a lien on property
Another option that the IRS has to collect back taxes is to place a lien on your property. If a lien is placed on property, the taxpayer cannot sell or transfer the asset before paying the tax debt. Tax liens can also have a negative impact on a taxpayer’s credit.
A step beyond placing a lien on property is seizing it. This is known as a “levy.” The IRS may be able to take your real property and sell it at auction to recover the amount owed to it. The IRS may be able to seize other property, including tax refunds, lottery winnings, vehicles, businesses, precious jewels, or other things of value.
Options for dealing with tax debt
Before exploring how you can work with an attorney on your IRS collections case, it is important to understand the various options that may be available to a taxpayer to resolve the debt. Some options may include:
- Installment agreement – The most common way for a taxpayer to resolve tax debt is to enter into an installment agreement with the IRS. With an installment agreement, the taxpayer makes monthly payments to the IRS until the tax debt is paid in full. Entering into an installment agreement may halt the IRS from taking more aggressive steps to collect the debt, such as garnishing wages or levying property.
- Offer in compromise – An offer in compromise allows a taxpayer to settle debt for less than they owe, either through a one-time lump-sum payment or through payments.
- Penalty abatement – Penalty abatement occurs when the IRS agrees to remove some or all of the penalties.
- Innocent spouse relief – Innocent spouse relief may be an option when one spouse acts illegally or unethically that exposes their spouse to tax liability. The innocent spouse may be able to avoid this liability.
- Bankruptcy – In some cases, bankruptcy may be able to discharge past due taxes.
The best option for a taxpayer depends on their specific circumstances. A lawyer can help evaluate the available options and make recommendations tailored to the taxpayer’s situation.
Advantages of hiring a tax lawyer
There are many advantages of hiring a tax lawyer. A tax lawyer has knowledge about complex tax laws. They may also be familiar with bankruptcy and when a taxpayer may be able to turn to bankruptcy for tax debt relief. They can use this knowledge and their experience to the taxpayer’s benefit.
Tax lawyers can help taxpayers evaluate the available options and make recommendations based on their particular situation. They can also communicate and negotiate on their behalf. Knowing that a tax professional is handling the matter can give taxpayers a great sense of relief. Lawyers have strict confidentiality with their clients. Therefore, what a taxpayer says to their lawyer is generally privileged.
Ways a lawyer can help with the collection process
If the IRS has initiated the collection process, you may want to hire a lawyer. The experienced tax attorneys with Damiens Law can help you with this process in the following ways:
Tax lawyers can take proactive steps to protect a taxpayer’s property. By establishing a way to resolve the debt, the taxpayer may be able to avoid tax liens, levies, or garnishments. Many taxpayers do not know that the IRS can still file a tax lien against them even if they have worked out solutions with the agency. Generally, the IRS does not release a lien until the tax debt has been fully paid. However, a tax lawyer knows there are certain situations when the IRS will release a lien and how to take advantage of these situations.
Negotiate for less money
A tax lawyer may be able to reduce a taxpayer’s tax debt in several ways. For example, an experienced IRS tax lawyer might:
- Try to have interest and penalties waived through abatement
- Attempt to reduce penalties significantly
- Make an offer in compromise to settle the tax debt for less than the taxpayer owes
- Get lower payments to pay off the debt
- Get some of the portion owed dismissed through innocent spouse relief
- Discharge tax debt as part of the bankruptcy process
- Reduce or eliminate tax debt by showing that paying it would cause an undue hardship
Tax lawyers work with the IRS on a routine basis. They are often seasoned negotiators who know the various types of relief available and who are willing to fight for the legal rights for their clients.
Provide legal advice and answer questions
Tax lawyers can provide valuable legal advice to clients. In some situations, tax issues may subject taxpayers to criminal offenses. Taxpayers can speak to their lawyers in a confidential manner and ask about potential legal exposure. An experienced tax lawyer can also provide advice based on the client’s particular situation. Additionally, if the taxpayer has any questions about the collection process or the underlying tax matter, a tax lawyer can answer them and provide other legal options.
Represent the taxpayer in legal proceedings
One of the most important ways that a tax lawyer can help a taxpayer is by representing them in legal proceedings. Tax court is different than any other type of court. A lawyer with experience here can give you a better idea about what to expect.
Additionally, tax lawyers can represent clients who are the subject of criminal investigations. They can advise them of their rights, such as the right to remain silent or not providing evidence that would incriminate them.
Appointing a tax lawyer for your case
The IRS states that taxpayers can authorize someone to represent them before the IRS in connection with a federal tax matter. They do this by completing Form 2848, Power of Attorney and Declaration of Representative. By completing and signing this form, the individual that the taxpayer names is allowed to represent them before the IRS and receive their tax information for the tax matters and years indicated on the form. The person indicated on the form must be an individual who is authorized to practice before the IRS.
Contact Damiens Law for help resolving your tax collections issue
If your tax debt has been placed in collections, the tax lawyers with Damiens Law may be able to assist you. When you contact us for a confidential consultation, we can explain effective ways you can work with an attorney on your IRS collections case. We can discuss the amount of taxes owed, the tax years involved, and whether any tax returns need to be filed. Then, we can develop a plan to address your particular situation. Our experienced tax attorneys will take the time to ensure you understand the collection process and how we can help.
If you would like help with a tax issue, consider contacting Damiens Law by calling our Mississippi office at (662) 442-4423 or the Tennessee office at (901) 499-4466.