Understanding the IRS Debt Collection Process
The Internal Revenue Service (IRS) is responsible for collecting taxes owed to the U.S. government. When taxpayers fail to pay their taxes on time, the IRS may initiate a collection process to recover the unpaid debt. This process typically involves sending notices, imposing penalties and interest, and potentially taking legal action.
Temporary Halt of Collections
In response to the economic challenges posed by the COVID-19 pandemic, the IRS temporarily paused certain debt collection activities. This pause was implemented in March 2020 and was later expanded in February 2022 to include a suspension of collection letters, including notices of property seizure.
Resumption of Collections
As the pandemic subsided and the economy began to recover, the IRS announced that it would gradually resume normal debt collection efforts. This resumption began in March 2024, with the IRS sending out “special reminder letters” to taxpayers with outstanding tax balances. These letters serve as a notice that regular collection procedures are back in effect and provide information on how to pay the balance or seek assistance.
Current Collection Status
The IRS is currently in the process of ramping up its debt collection activities. Taxpayers who have not yet received a special reminder letter may still receive one in the future. It is important to note that the IRS has a legal obligation to collect outstanding tax debts, and failure to pay can result in serious consequences, including penalties, interest, liens, and levies.
Options for Taxpayers
Taxpayers who are unable to pay their tax debts in full may have several options available to them. These options include:
- Short-term payment plan: A free 180-day repayment plan is available for taxpayers who owe less than $100,000 in combined tax, penalties, and interest.
- Long-term payment plan: A long-term payment plan, also known as an installment agreement, is available for taxpayers who owe more than $100,000.
- Offer in compromise: The offer in compromise is an application to settle your tax debt for less than you owe, mainly because of financial hardship.
- Currently not collectible: If you are unable to make any payments toward your balance due to financial hardship, you may be able to temporarily delay collections by being deemed “not collectible” by the IRS.
Contacting the IRS
Taxpayers who have questions about their tax debts or need assistance with payment options should contact the IRS at 800-829-1040 or call the phone number on their bill or notice. The IRS is committed to working with taxpayers to find a solution that meets their individual circumstances.
The IRS has resumed normal debt collection efforts after a temporary pause during the COVID-19 pandemic. Taxpayers who have outstanding tax balances should expect to receive communications from the IRS and should take prompt action to address their debts. The IRS offers several options for taxpayers who are unable to pay their debts in full, and taxpayers are encouraged to contact the IRS to discuss their options.
IRS Statute of Limitations on Collections: What you need to know
FAQ
Has the IRS stopped collections?
Is the IRS resuming debt collections?
Why did my IRS debt disappear?
Does the IRS forgive debt after 10 years?
Why did the IRS stop sending automated tax collection notices?
The IRS has stopped sending some automated collection notices in the mail this tax season due a massive backlog of unprocessed tax returns that won’t likely be cleared until 2023. The 13 letters that the IRS has paused include balance due notices and unfiled tax return notices.
Are IRS collections notices going out?
IRS collections notices are going out. What to know, whether to worry IRS is sending out collection letters for the first time in 2 years. Here’s what to know. The IRS collection letters are arriving in mailboxes once again. And if you get one, tax professionals say, please, don’t throw it in a drawer and ignore it.
When will the IRS halt automated tax collection practices?
A few days later, a bipartisan group of senators and representatives urged the IRS to halt automated collection practices until at least 90 days after the tax filing deadline of April 18. The IRS announced it was suspending the 15 notices listed below on Feb. 9. The letters will be paused until the IRS backlog has been eliminated.
Will tax collection notices stop in 2022?
However, even though the collection notices will stop, taxpayers who owe tax returns or money to the IRS are still required to file their taxes and pay their debts. The IRS entered 2022 with a backlog of 24 million unprocessed returns and is hiring 10,000 new employees to help resolve the issue, according to the Washington Post.