IRS Collections Archives - Page 6 of 9

Is Bankruptcy an Option?

May 25, 2026December 16, 2013 by Brotman Law

Filing for bankruptcy is an indication to your creditors that you are unable to repay your debts. On the other hand, bankruptcy provides you with protection from your creditors. It provides you with an opportunity to develop an effective debt repayment and management plan.

Key Takeaways

Filing for bankruptcy is an indication to your creditors that you are unable to repay your debts. On the other hand, bankruptcy provides you with protection from your creditors.
However, keep in mind that although it is a viable option, bankruptcy is still a drastic solution that will have negative effects upon your finances and your credit history. A bankruptcy stays on your credit report for 10 years.
Understand that declaring bankruptcy may provide you the fresh start you need, but also understand the consequences of choosing the option and how it will affect your life and your finances for the next 10 years. Keep a good perspective.

How to Pay Your Taxes

May 25, 2026December 16, 2013 by Brotman Law

How to Pay Your Taxes in Full

Unlike Chapter 7 bankruptcy, chapter 13 bankruptcy requires the taxpayer to pay all debts in full over a three-year to five-year period. With chapter 7 bankruptcy, most debts are cancelled and you must surrender some property to the bankruptcy trustee to pay creditors. However, with chapter 13, you end up paying most if not all of your debts over time. That’s why chapter 13 bankruptcy is considered the reorganization bankruptcy.

Key Takeaways

Unlike Chapter 7 bankruptcy, chapter 13 bankruptcy requires the taxpayer to pay all debts in full over a three-year to five-year period.
In a chapter 13 bankruptcy, filers must develop a repayment plan, the length of which is determined by how much the taxpayer earns and how much he or she owes. “Your Chapter 13 plan must pay certain debts in full.
Requesting an extension to pay your taxes involves multiple options. For one, taxpayers can utilize the option of requesting an automatic extension to file their individual income tax return.

The Collection Statute Expiration Date

May 25, 2026December 16, 2013 by Brotman Law

The Collection Statute Expiration Date (CSED) falls under Section 19[1] of the Internal Revenue Manual (IRM). The CSED refers to the idea that every tax assessment has a statute of limitations. The rules and procedures for the CSED are governed by statute, namely section 6502(a) of the Restructuring and Reform Act of 1998 (RRA 98).

Key Takeaways

According to the IRM, each tax assessment has a collection statute expiration date, or CSED (IRS.gov, “Part 5. Collecting Process, Chapter 1. Field Collecting Procedures, Section 19. Collection Statute Expiration,” 8/17/2013).
If you file for bankruptcy, because of the automatic stay imposed by the proceedings, the CSED is generally suspended.
The CSED is extended throughout the duration of the bankruptcy proceedings plus six months. It is extended on non-dischargeable tax liabilities, from the date of filing for bankruptcy to the date the bankruptcy is either discharged or dismissed.

Psychological Effect of IRS Collections

May 25, 2026December 16, 2013 by Brotman Law

Achieving financial stability should be a lifelong goal. Developing financial plans and meeting long-term objectives is a lengthy process that requires patience, discipline, and endurance. What happens when your plans are disturbed because of past and present financial issues that threaten to destroy your future? Bankruptcy is one of those financial problems that take into consideration your past, your present, and your future.

Key Takeaways

Achieving financial stability should be a lifelong goal. Developing financial plans and meeting long-term objectives is a lengthy process that requires patience, discipline, and endurance.
What you have done with money up to this point will dictate, in essence, how money will be distributed from the income you bring in. Now you must develop a debt repayment plan and lose a significant percentage of your income to repaying old debts.
A money crisis is taxing on the mental state. This is especially significant for filers of bankruptcy.

IRS Wage Garnishment Protocol

May 25, 2026December 16, 2013 by Brotman Law

Wage garnishment is the most common type of garnishment, or attachment to earnings and/or assets. Wage garnishment is defined as the process of deducting money from an employee’s wages, or monetary compensation, as a result of a court order or related equitable procedure. A wage garnishment will continue until the entire debt is paid. There are common examples of different types of debts that result in wage garnishment. These types include child support, defaulted student loans, taxes, and unpaid court fines.

Key Takeaways

When employers receive a notice to withhold part of an employee’s wages, the garnishment becomes a part of the payroll process. Employers are required to make the deductions until the debt is satisfied.
The deductions above are required by law. The deductions that are not required by law include union dues, health and life insurance, and charitable contributions (“Wage and Hours Worked: Wage Garnishment”).
However, Title III allows for the garnishment of wages at a greater amount when it comes to child support, bankruptcy, and/or federal or state tax payments (“Wages and Hours Worked”).

IRS Penalty Abatements and Reasonable Cause

May 25, 2026December 16, 2013 by Brotman Law

IRS Penalty Abatements

As noted previously, the purpose of (assessing) a penalty is to encourage voluntary compliance. “Voluntary compliance exists when taxpayers conform to the law without compulsion or threat” (IRS.gov, “20.1.1.2.1 Encouraging Voluntary Compliance,” 8/14/2013). The taxpayer supports the tenets of the Internal Revenue Code in achieving voluntary compliance when he or she makes a good faith effort to meet all tax obligations (“Encouraging Voluntary Compliance”).

Key Takeaways

As noted previously, the purpose of (assessing) a penalty is to encourage voluntary compliance. “Voluntary compliance exists when taxpayers conform to the law without compulsion or threat” (IRS.gov, “20.1.1.2.1 Encouraging Voluntary Compliance,” 8/14/2013).
Within this context, the taxpayer is deemed compliant when he or she responds to written materials outlining the tax rules and completes all forms relevant to their tax liability.
When a taxpayer provides an explanation to support his or her request for relief, the IRS waives and/or abates the applicable penalty.

How IRS Interest is Calculated

May 25, 2026December 16, 2013 by Brotman Law

You are required to file a return if you have earned income in the previous year. You are also required to pay all tax by the due date to avoid IRS interest and penalty charges. The official due date to file and pay taxes is April 15. This is the “deadline for most people to file their individual income tax return and pay any tax owed” (IRS.gov, “Topic 653 – IRS Notices and Bills, Penalties and Interest Charges,” 7/26/2013). All U.S. tax returns are checked for mathematical accuracy. In the event that you owe money to the IRS, you will be sent a bill. With this in mind, familiarize yourself with the different types of penalties and IRS interest charged to your tax balance as well as the procedures and methods used to calculate interest and penalties.

Key Takeaways

You are required to file a return if you have earned income in the previous year. You are also required to pay all tax by the due date to avoid IRS interest and penalty charges. The official due date to file and pay taxes is April 15.
For example, there is an IRS interest charge on the unpaid tax. Unpaid tax is determined by the balance due from the date of the return to the date of payment (“Topic 653”).
It is important to note that the one-half of one percent rate will increase to one percent when the tax is unpaid for 10 days; and this is the time maximum for after the IRS issues a notice of intent to levy.

How to Fight a Wage Levy

May 25, 2026November 14, 2013 by Brotman Law

Fighting a wage levy involves taking the steps necessary to ensure your assets are protected. However, when there is an outstanding tax liability for which you are responsible and when you do not satisfy the debt, the IRS will pursue action that may involve attaching an interest in your paycheck. With this in mind, a wage levy is a legal seizure of property to satisfy a debt. If you do not pay your taxes, the IRS may seize and sell any type of property belonging to you to satisfy the tax liability.

Key Takeaways

Fighting a wage levy involves taking the steps necessary to ensure your assets are protected.
The process for attaching an interest to your wages is three-part.
With all of this in mind, when it comes to wage levies, the most important strategy for avoiding the levy is to pay the taxes owed. When the IRS sends a Notice and Demand for Payment, respond to that notice with a payment.

Can I Make Payments to the IRS?

May 25, 2026November 11, 2013 by Brotman Law

Many people who are not able to pay their tax payments immediately ask the question “Can I make payments to the IRS?” The answer is yes; however, paying your full tax debt will save you the set up fees and reduce or eliminate penalty costs. If you have another source, such as a credit card or loan, you could save money by paying your entire tax bill. If you have no other options, IRS installment agreements are a great way to help you avoid default.

Key Takeaways

Many people who are not able to pay their tax payments immediately ask the question “Can I make payments to the IRS?” The answer is yes; however, paying your full tax debt will save you the set up fees and reduce or eliminate penalty costs.
Prior to applying for installment agreement, you must file all of the required tax returns. Determine the amount you are able to pay each month. There is a minimum monthly installment requirement of $25.
You also want to know “Can I make payments to the IRS to avoid default with the IRS?” If you understand your IRS installment agreement, you will be able to avoid default.

IRS Tax Lien Release – Part Three – Release and Subordination

May 25, 2026October 19, 2013 by Brotman Law

Continued from IRS Tax Lien Release – Part Two – Lien Withdrawal

Key Takeaways

Second to getting the IRS to withdraw the lien entirely, you want to make sure that you get a tax lien release from the IRS. A tax lien release will still appear on a taxpayer’s credit, but the lien will be shown as paid and not have as adverse an effect.
Finally, it the IRS will not agree to tax lien withdrawal or tax lien release entirely, a lien subordination is a third option for dealing with an IRS lien.
In conclusion, IRS tax liens are problematic for taxpayers and are best dealt with sooner rather than later. That said, if a lien has been placed on your property there are a number of options for resolving the issue.