Follow Adam Linkedin Twitter Facebook
Email Adam Email
Financial
Jul 14, 2017

A Guide To The IRS Collection Process

Sponsored Content provided by Adam Shay - Managing Partner, Adam Shay CPA, PLLC

This Insights was contributed by Richard Pasquantonio, CPA/CFF, CFE, CDFA (NC License Number 33577), an associate at Adam Shay CPA, PLLC.

The IRS Collection Process is a series of actions the IRS takes to collect taxes if they are not paid voluntarily. Before the collection process begins, the IRS will send you a bill called a CP14 Notice. It will identify the tax period and explain the amount of tax, any payments made, additional interest and/or penalties and the balance due. 

If the taxpayer does not respond to the bill, the IRS will resend a CP501 Notice. Once you receive a bill from the IRS, you can pay it, ignore it or challenge it.

If you pay the bill, then the issue is resolved. However, many people are unable to pay the full amount due or are uncertain if the amount due is accurate.

If you ignore the bill, the IRS will assign your case to the Automated Collection System (ACS). As the name implies, much of this process is performed automatically, including levying financial assets or filing liens against property via Notice CP504. 

However, the ACS also employs IRS Contact Representatives responsible for collecting unpaid taxes from delinquent taxpayers who have not complied with previous notices. They function much like the collection department of a large corporation documenting taxpayer responses and soliciting payments.
ACS Contact Representatives have very strict guidelines they are required to follow. Unless the taxpayer can pay the balance in full or the amount owed is less than $50,000, it is often beneficial to request a Collection Due Process hearing in order to get the case in front of an IRS Appeals Officer or Settlement Officer, who may have more flexibility and knowledge of the tax code and IRS procedures. 

This is a particularly useful approach if it is determined that the amount due is not accurate, as any attempt to explain the issue with IRS Collections often proves futile.

If the amount due is accurate, then alternative payment resolution options that exist at the collection level include traditional and monitored installment agreements, Offer in Compromise or requesting the account be placed into Currently Not Collectable status. 

If the amount due is less than $50,000, taxpayers are eligible to participate in the Streamlined Installment Program which requires little documentation. Otherwise, the taxpayer is required to complete the appropriate personal financial statement associated with the resolution option for which they choose to apply. They must also provide the IRS with three months of supporting documentation.

After the IRS reviews the package, it will either accept or reject the taxpayer's application. If the IRS accepts the application, the taxpayer is responsible to honor the term of the agreement. If the taxpayer has  requested a monitored agreement or to be placed in a Currently Not Collectable status, then the taxpayer may be asked to resubmit updated financial statements to reassess his or her ability to pay.

If the IRS rejects the taxpayer’s application, then the taxpayer may request a manager review the application. If the review does not change the result, then the taxpayer may submit his or her application to the Collection Appeal Program, the Office of Appeals or file a petition in the Tax Court.

Richard Pasquantonio, CPA/CFF, CFE, CDFA (NC License Number 33577), is an associate at Adam Shay CPA, PLLC. He focuses on forensic accounting, fraud prevention and detection, and tax controversy resolution. He is also an AICPA CFF Champion. The purpose of the CFF Champion program is to inform the professional community about the vital role of forensic accounting professionals, the knowledge required to become a CFF, and the benefits of the CFF credential. For more information, visit http://www.wilmingtontaxesandaccounting.com/ or email him at [email protected] Pasquantonio can also be reached by phone at (910) 256-3456.
 
Adam Shay, CPA (N.C. License Number 35961), MBA, is managing partner of Adam Shay CPA, PLLC. He focuses on minimizing taxes and improving the financial results of entrepreneurs, and is actively involved in supporting the Wilmington entrepreneurial and startup community. For more information, visit http://www.wilmingtontaxesandaccounting.com/ or email him at [email protected]. He can also be reached by phone at (910) 256-3456.

Other Posts from Adam Shay

Adam shay blk 52015121549
Ico insights

INSIGHTS

SPONSORS' CONTENT
Chheadshot

Overcoming the Opioid Overdose Crisis

Billhunter300x300 b&w

Old School - The Hidden Value of Handwritten Notes

Bill Hunter - Wilmington Design Company
Jason wheeler 300x300

New Executive Order Changes Financial Aid Process

Jason Wheeler - Pathfinder Wealth Consulting

Trending News

Wish You Were Here? Local Airbnb Rental Lands On The Most Wish Lists For New Hanover County

Cece Nunn - Jun 18, 2019

N.C. Azalea Festival Announces Board

Christina Haley O'Neal - Jun 18, 2019

Luxury Home Sales Reach Record Height In May

Cece Nunn - Jun 17, 2019

Retail Store Benefiting Human Trafficking Survivors Opens Downtown

Johanna Cano - Jun 18, 2019

Scoopin’ Yummies A Sweet Sensation In Carolina Beach

Jessica Maurer - Jun 18, 2019

In The Current Issue

Manufacturer On Board To Invest $25M

With its proximity to the Cape Fear River and customer markets, the Wilmington area provides an essential location for National Gypsum, a gy...


Novant Health Orthopedics & Spine Opens In Supply

Novant Health has opened an orthopedics and spine office in Supply, providing degenerative spine condition services, orthopedic spine surger...


First Carolina To Open Full-service Branch

First Carolina Bank, which has maintained a loan production office in Wilmington since September 2017, will open a full-service branch here....

Book On Business

The 2019 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2019 WilmingtonBiz Expo Keynote Lunch - CEO, nCino, Pierre Naude`
Transporting the Future - Power Breakfast 3.12.2019
Health Care Heroes 2018