HOW DOES IRS AUTOMATED COLLECTION SYSTEM COLLECT A TAX LIABILITY?

What is the IRS Automated Collection System?

If you have a tax liability, you have rights and must be vigilant to protect those rights. Moreover, the IRS will be aggressive in its collection efforts, so you must be just as aggressive in protecting yourself. The IRS has an awful lot of power and sometimes can overreach and, therefore, must be checked. The IRS has various programs at its disposal to enforce collection of IRS liabilities. One of these program is the automated collection systems, or ACS. The ACS is a call center that the IRS has with offices across the nation. You can call in the to the call center to establish an installment agreement with the IRS. Once you have established an installment agreement, the IRS will not levy your bank accounts or garnish your wages.

What Installment Agreement Options are Available?

One installment agreement option is the streamlined agreement. If your liability is under $50,000, you can request an installment agreement over 72 months, meaning that the total liability, assuming it is under $50,000, can be divided by 72 months and paid in monthly installments over 72 months. There are ways to avoid a lien being filed by the IRS. One way to avoid a lien is by paying down the tax liability to below $25,000 and establishing a direct debit payment plan.

If your liability is over $50,000 or if you cannot pay the liability off within 72 months, then you will need to submit financials to the IRS. Basically, this means that you will need to submit a statement and proof of your monthly income and personal living expenses. The IRS caps certain living expenses, so be aware of the strategy surrounding how to present your income and expenses so that you can obtain the most optimal installment agreement with the IRS.

Can the IRS Levy if I do not Request an Installment Agreement?

The IRS can levy your bank account or assert a lien if you do not address your tax liability. The IRS will typically mail you several notices to your last known address pertaining to your outstanding tax liability. It is very important that you receive and open these and take notice of the dates and deadlines associated with the letters. For the IRS to levy your wages or bank accounts, the IRS must first mail a final notice of intent to levy, which notice will provide you with appeal rights. However, you only have 30 days from the date on the letter to file an appeal. When the IRS issues a levy, they will send a levy notice to all major banks, and the levy will be based on your social security number. When you fill out a bank signature card, you will provide the bank with your social security number. The IRS levy will require the bank to levy funds for all bank accounts over which you have a bank signature card based on your social security number.

If the IRS has issued a levy, you can request the IRS to release the levied funds based on a financial hardship. There are also steps you can take to prevent the IRS from issuing a levy. If you have a tax liability and have questions, contact Disparte Tax Law today for a free consultation.