How IRS Collections Works

Education & Training with Law Office of James D. Wade

How IRS Collections Works: What You Need to Know?


My firm focuses on helping taxpayers in Portland, Maine with IRS tax problems. One of the keys to resolving their tax issues is understanding the process. From filing a tax return to the final notice of intent to levy, there is a logical sequence of how the IRS collects taxes. This post provides the basic framework.

The Framework

The process starts when the IRS receives your tax return. Upon receipt, the IRS records a tax assessment against the taxpayer's "account" for the taxes shown on the tax return. If the taxpayer has not paid his or her taxes in full the IRS issues a series of billing notices and demand for payment.

If the taxpayer does not pay the taxes due upon receiving the IRS' notice and demand then a statutory lien arises. This statutory lien now restricts the ability of the taxpayer to sell or dispose any assets he or she owns. 

If the total taxes due are $10,000 or more the IRS will file a notice of federal tax lien with the registry of deeds in the taxpayer's county of residence. This is a more formal lien which is a public record and it will have an impact on the taxpayer's credit.

If the taxpayer continues to not pay the taxes due then the IRS taxes more aggressive collection actions. The IRS will issue a Final Notice of Intent to Levy which tells the taxpayer that if the taxes due are not paid then the IRS intends to levy the taxpayer's assets. Normally this means a seizure of money in a bank account or garnishment of the taxpayer's wages.

During the 30-day period, the taxpayer has a right to request a collection due process hearing. Called a CDP hearing, this is an opportunity for the taxpayer to offer a collection alternative to an IRS levy. The taxpayer has 30 days to request the hearing. If the taxpayer fails to file the request on time, the taxpayer loses the opportunity to contest the IRS actions in court.

Finally, if the Final Notice of Intent to Levy letter is ignored then the IRS can levy upon the taxpayer's assets. Often it is at this point that the IRS gets the taxpayer's attention. Nothing can be more disruptive than when the IRS seizes the taxpayer's funds. This is how the IRS forces the taxpayer to contact the IRS to arrange some payment arrangement.

As you can see, the IRS collections process follows a predictable sequence. Throughout the process there are opportunities for the taxpayer to resolve his or her tax debts. In a later post I will explain how a taxpayer goes about resolving their tax debts. 

If you or someone you know in the Portland, Maine area has received an IRS collection notice or a Final Notice of Intent to Levy, please feel free to contact me directly at 207-299-0515 or by filling out my contact form.


James D. Wade, Esq.

Law Office of James D. Wade

53 Exchange St., Ste 400

Portland, ME 04101



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Mel Ahrens, MBA, Kelly Right Real Estate
Kelly Right Real Estate - Hood River, OR
Customized Choices for your Real Estate Needs

Welcome to Active Rain, a great place to learn, share, and network. I like the phrase "forces the taxpayer to contact the IRS".

Dec 10, 2018 11:13 AM #1
Michael Crosa CPA
Michael L Crosa CPA - Kendall, FL
Solving IRS Problems For Real Estate Pros

Good and concise.  Like your video.

Dec 10, 2018 01:27 PM #2
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

James Wade welcome to ActiveRain, and congratulations on successfully posting your first blog on this site.

Dec 10, 2018 03:34 PM #3
Sara Wagner
The Woodland Companies - Adams, WI
Stevens Point Rentals

Welcome to ActiveRain, I hope that your participation here helps your business to grow.
Btw, I followed your blog, and would be honored if you followed mine.
Thank You!

Dec 11, 2018 05:55 PM #4
Bob Crane
Woodland Management Service / Woodland Real Estate, Keller Williams Fox Cities - Stevens Point, WI
Forestland Experts! 715-204-9671

Welcome to Active Rain, looking forward to reading many more of your posts, let me know if there is anything that I can do to help as you get started here.
All the best of success to you.

Jan 17, 2019 06:10 PM #5
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James Wade

Tax attorney serving clients in Portland, ME
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