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Collections Alternatives

Common Law PC Dec. 29, 2023

Dealing with tax collection issues can be extremely stressful. It's not something to ignore or push aside, but it's also probably something you'd rather not think about. We understand, but the IRS will be a little less forgiving.  

The IRS is persistent and will continue to seek what they believe is owed. This dynamic will only add more layers of stress to your situation. But if you're researching your alternatives, you're on the right track. It's key to remember that you have multiple options for getting through this. We're here to guide you through these alternatives and help you take control of your tax situation. 

Understanding Tax Collections

Before we delve into the alternatives, let's first understand what tax collections actually means. Tax collection is the process of collecting taxes that are owed to a government entity, typically the IRS in the United States. This can include unpaid income taxes, property taxes, or any other type of tax that an individual or business is required to pay. 

The IRS has the authority to collect taxes through various means, including wage garnishment, bank levies, and property seizures. These measures can be taken if an individual or business fails to pay their taxes on time or refuses to pay altogether. 

Tax Collections Alternatives

There’s a variety of tax collections alternatives. The right strategy for you will depend on your unique financial situation. Here's a rundown of the most common ones: 

  1. Levy Relief, Wrongful Levy, Levy Release (With Economic Hardship), Return of Levy Proceeds: If the IRS has placed a levy on your property or wages, you may be eligible for relief. This could include proving the levy was wrongful, showing that it causes you economic hardship, or requesting the return of levy proceeds. 

  1. Installment Agreement: This option allows you to set up a payment plan with the IRS, enabling you to chip away at your balance over time. It's a flexible solution that takes into consideration your current financial standing. 

  1. Partial Pay Installment Agreement: Similar to an installment agreement, this option allows you to pay back less than the full amount owed over time. 

  1. Currently Not Collectible: If you're unable to pay your outstanding tax liabilities due to financial hardship, this might be a viable option for you. The IRS recognizes that sometimes, taxpayers just can't afford to pay their tax debt right now. 

  1. Bankruptcy (Insolvency) — Litigation track: In some cases, declaring bankruptcy can eliminate some or all of your tax debt. However, this is a complex process and should be considered carefully. 

  1. Taxpayer Disagrees with Assessed Amount — Exam track: If you disagree with the amount the IRS has assessed, you have the right to challenge it. This process can involve submitting additional documentation or going through an audit reconsideration. 

  1. Pay Tax Due in Full: If you have the financial means, you can choose to pay your tax debt in full to avoid further penalties and interest. 

  1. Offer in Compromise, Doubt as to Liability, Doubt as to collectibility, Effective Tax Administration (Equity, Public Policy, Economic Hardship): These options allow you to settle your tax debts for less than the full amount owed if you can prove that you're unable to pay the full amount, that there's doubt as to the liability or collectibility of the debt, or that paying in full would cause economic hardship or be unfair due to exceptional circumstances. 

  1. Lien Relief, Withdrawal of Notice of Federal Tax Lien, Lien Discharge, Lien Subordination, Lien Release: These procedures can help you deal with a federal tax lien. Each has its own set of requirements and potential outcomes, which we can help you navigate. 

The Consequences of Non-Payment

Not paying your taxes can have serious ramifications. The IRS has the power to impose penalties and interest on unpaid taxes, which can add up quickly and plunge you into debt. If you ignore the issue, it can also result in wage garnishment, bank levies, or even property seizures. 

Moreover, having tax debt on your record can negatively impact your credit score and make it difficult to obtain loans or credit in the future. That's why it's critical to address any tax collection issues as soon as possible to avoid these consequences. 

Know Your Rights

As a taxpayer, you have rights. The IRS has established a set of taxpayer rights to ensure fair treatment and a just tax system. These include the right to be informed, the right to quality service, the right to pay no more than the correct amount of tax, the right to finality, the right to privacy, the right to retain representation, and the right to a fair and just tax system. 

We're here to help you understand these rights and how they apply to your situation. It's our goal to provide you with the knowledge and tools you need to make informed decisions about your tax issues. 

Remember, at Common Law PC, we're here to help you navigate these tax challenges. Based in Salt Lake City, Utah, and serving clients throughout Park City, Provo, Ogden, and St. George, we're ready to provide you with advice and effective solutions tailored to your unique needs. Don't let tax collection issues overwhelm you — reach out to us and regain control of your tax situation today.