IRS Enforcement Tools

What the IRS Does to Collect Taxes

IRS Enforcement Tools

Read part one for more information on Dealing with the IRS.

The IRS has three major ways to ensure that you pay your taxes (they have many more wyas to determine if you owe them something):

• Imprisonment
• Penalties and Interest
• Seizure of Bank Accounts and Assets

Imprisonment

It is relatively rare for the IRS to bring criminal actions - only about 2400 a year.

The bad news is that the IRS has an 85% conviction rate.

If you are ever contacted by an agent of the IRS Criminal Investigation Division run as fast as you can to a qualified criminal defense attorney.

Penalties and Interest

The IRS automatically adds penalties and interest to taxes it feels it is owed.

Sometimes these can dwarf the original tax bill.

If you personally negotiate with the IRS, you can try to get some or all of them waived. The auditors usually have some descretion in this area.

If you are really being hit hard, you can try for Penalty Abatement.

Before the IRS considers you request, you need to establish that you had a reasonable cause for getting behind on your taxes.

Here are some things the IRS may consider to be reasonable cause:

• Embezzlement or theft.
• Fire, flood, windstorm, riot or other disaster out of your control.
• Bad accounting advice.
• Lost or destroyed records.
• Serious health ailment.
• Serious health ailment of a family member.
• Death of a close family member.
• A divorce that caused a lot of anxiety and upset your financial and/or mental equilibrium.
• Caring for someone who cannot care for himself or herself.
• Retired or on a fixed income.
• Psychological problem that required treatment.
• Lengthy period of unemployment.
• First time filer of a new tax form.

Then you have to show the IRS that you have been diligent and not neglectful in your efforts to repay your tax debt.

This request has to be specifically worded, so it is best that you hire a tax professional to help you prepare it.

Seizure of Assets

The IRS is a cumbersome agency and there are protections built into the regulations to give taxpayers some help. You will have plenty of notice that the IRS intends to seize your property.

You definitely should see a tax professional as soon as the IRS raises the subject.

Don't wait until all your bank accounts are empty before taking action.

Tax professionals know how to deal with the IRS. The agency really is more interested in getting a reasonable settlement of your tax liability than in punishing you.

Moreover, an IRS collection agent will have a much different attitude when dealing with a professional than he would with the taxpayer himself.

So, if you want any chance of keeping your assets, find a pro to represent you.

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Read part three for more information on Offers of Compromise This article does not purport to offer legal advice.

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