IRS collection letters arrive in envelopes conspicuously labeled with the IRS logo, as though to inform your mail carrier and neighbors that you have received an IRS collection letter. Some of these letters contain ominous pronouncements such as: “NOTICE OF INTENT TO LEVY”.
Pre-COVID, approximately 1 in 6 American taxpayers owed money to the U. S. Treasury. This number is sure to grow as Americans file their first post-COVID tax returns and discover just how much of the assistance they received from the Federal Government they are required to return to the Federal Government in the form of income taxes on various assistance programs.
Perhaps you have received one of these letters or realize such a letter is on the way. Here are a few steps you should take that will lead you past your problems with the IRS and towards a less stressful and more enjoyable life.
The single most important thing you can do when you receive an IRS collection letter is to OPEN THE ENVELOPE AND READ THE LETTER! Too many taxpayers throw away the letter without even reading it. You may choose to ignore the information in the letter, but it will not ignore you. Unpaid taxes will compound with interest and penalties and eventually transform themselves into liens and levies on wages, bank accounts and even retirement savings.
The next thing you should do is to take stock of your resources and determine your ability to pay these taxes. Too frequently, a taxpayer who received an IRS collection letter who was able to pay off the balance in a 6 -12 month payment plan delays or attempts to be too clever and winds up turning an undesirable but manageable tax bill into a crises. Unpaid income taxes can compound at rates greater than a credit card. If you can pay off the tax bill in 12 months that is likely to be your simplest and least expensive solution.
I will detail the next steps to take in future blog articles. In the meantime, if you or someone you know has received an IRS collection letter and are unable or unsure how to proceed contact me at 312 577-9405, or David@RatowitzLawGroup.com.