What Are My Options If I Owe Back Taxes?


An IRS levy, garnishment, or lien is a stressful prospect for anyone who owes back taxes. Kugelman Law’s experienced team of tax professionals advises clients on available tax collections options and advocates for alternative approaches to favor our clients.

Most so-called tax resolution firms and tax lawyers will exploit fear of IRS enforcement actions to try and extract large fees. It is important taxpayers are educated about the realities of the situation. Some will be able to obtain self help, while for others it might be wise to hire a professional tax attorney.

Please keep in mind that each collection case is unique based on the circumstances, but in general the following applies to most collection cases.

Tax Collections Enforcement

First, the vast majority of IRS enforcement is civil, not criminal. The IRS reserves criminal prosecution for the most egregious violations. While criminal liability should be evaluated, it is improbable for most taxpayers.

Rather the IRS and other tax agencies have two primary collection mechanisms.

The first is a levy. A levy is when the IRS takes assets to pay a tax balance. This may come in the form of wage garnishment or a bank levy. In rare cases, the IRS will administratively or judicially seize property like valuable jewelry or real estate.

The second enforcement mechanism is a lien. A tax lien is the government’s legal claim against your property. It is typically recorded in the county you reside and attaches to the title of any real estate you own. A lien will come into play if you attempt to sell or refinance the property.

Preventing liens and levies depends on the amount owed, whether the IRS has begun these actions, and whether the taxpayer’s account is assigned to a revenue officer for collection.

Generally, most taxpayers can take action to prevent liens and levies.

The IRS has two threshold requirements to avoid enforced collection.

First, a taxpayer must achieve filing compliance. This means all tax returns have been filed.

Second, a taxpayer must have paid all estimated taxes for the current tax year. This sounds relatively simple, but this can trip up many taxpayers, and the IRS strictly enforces these requirements.

Taxpayers that meet these requirements can pursue a collection alternative.

Tax Collections Options

There are three primary tax collections options:

  • Offer in Compromise
  • Installment agreement
  • Currently not collectible status

All three are based on a taxpayer’s ability to pay towards the balances. The IRS evaluates the taxpayer’s assets, income, and allowable living expenses to determine that amount.

As a starting point, a taxpayer should complete IRS Form 433. It is helpful for the taxpayer to review the applicable IRS national standards to better anticipate IRS analysis of expenses. And for any taxpayer interested in the Offer in Compromise they should first try the IRS pre-qualifier tool. This will help taxpayers assess their options.

Did you know? Taxpayers that owe less than $50,000 can set up a streamlined installment agreement online without providing any financial information.

Kugelman Law is comprised of veteran lawyers and professionals with substantial IRS experience resolving tax collections issues.

We strive to effectively and efficiently resolve each client’s tax issue – no matter the size or complexity.

Please contact Kugelman Law today for a consultation if you would like us to advocate on your behalf.

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