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How to Avoid IRS Collections Activity on Old Tax Debt

How to Avoid IRS Collections Activity on Old Tax Debt

Dealing with the IRS can be super stressful, I feel you. But there are ways to get them off your back, even if you have old tax debt. This article will give you some practical tips and info to help you navigate the collections process.

The 10 Year Rule

Generally, the IRS has 10 years to collect back taxes from the date they were assessed (this is called the collections statute expiration date or CSED). After 10 years, the remaining unpaid balance is forgiven (meaning you don’t have to pay it anymore).

There are some exceptions though – the 10 years can be extended if you do certain things like file bankruptcy, request a collection due process hearing, apply for an offer in compromise, etc. But in most cases, 10 years is the limit.

What Happens During Those 10 Years

The IRS doesn’t just sit around for 10 years waiting to collect. They start sending notices and taking collection actions right away. Here’s a quick rundown of what to expect:

  • Notice of balance due – mailed within 60 days of you filing a return with unpaid tax.
  • Notice of intent to levy – mailed after the first notice. Gives 30 days to pay before a levy.
  • Final notice of intent to levy – mailed after 30 days if you don’t pay.
  • Levy – the IRS can levy your wages, bank account, or other assets.
  • Notice of filing federal tax lien – mailed after the levy notice. Allows IRS to stake a legal claim on your property.
  • Notice of intent to seize property – mailed after the lien notice if you still haven’t paid.

As you can see, the IRS doesn’t mess around. They will escalate collection actions rapidly if you ignore their notices.

Options Once You Get Collection Notices

Don’t panic if you start getting collection notices on old tax debt. You still have options to resolve it or at least buy more time:

  • Payment plans – The IRS may let you set up an installment agreement to pay over time. This prevents more aggressive actions as long as you stick to it.
  • Offer in compromise – You can settle tax debts for less than the full amount owed if you can prove financial hardship. Use the IRS pre-qualifier tool to see if you qualify.
  • Currently not collectible status – The IRS may temporarily delay collection if they determine you can’t pay anything right now due to financial problems.
  • Collection appeals – You can challenge IRS collection actions (like a levy) by requesting a Collection Due Process hearing.

The key is taking action quickly after getting those first few notices. Don’t wait until they start garnishing your wages or seizing assets.

Christine Twomey
Christine Twomey
2024-03-21
Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.
Brendan huisman
Brendan huisman
2024-03-18
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
2024-03-18
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
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Keisha Parris
2024-03-15
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko Beauty
Taïko Beauty
2024-03-15
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
Anthony Williams
2024-03-12
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
Loveth Okpedo
Loveth Okpedo
2024-03-12
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Bee L
Bee L
2024-02-28
Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.
divesh patel
divesh patel
2024-02-24
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

What About New Tax Debt?

Having old tax debt go past the 10 year limit can be a big relief. But make sure you stay current on any new tax bills, or the cycle will just repeat itself. Here are some tips:

  • File your returns on time, even if you owe. The failure to file penalty is 5% per month.
  • Pay as much as you can upfront if you owe. The failure to pay penalty is only 0.5% per month.
  • Get on a payment plan immediately if you can’t pay in full. This minimizes penalties and interest.
  • Adjust your withholding if needed so you don’t owe a big chunk at tax time.

Following these tips will help prevent new tax debts from spiraling out of control. And be sure to set aside some money throughout the year for your tax bill.

Other Consequences

Having unpaid tax debts, even old ones, can cause other problems too:

  • Your passport may be revoked if you owe over $50,000.
  • It can hurt your credit score, making it harder to get loans.
  • You may not be able to renew state licenses (like a driver’s license) until resolving IRS issues.
  • If you own a business, you may not qualify for some government contracts.

So getting back in good standing with the IRS, or at least letting the 10 years expire, can prevent other headaches down the road.

When to Get Professional Help

Dealing with the IRS can be confusing, and the stakes are high if you make a misstep. Consider getting help from a tax pro if:

  • You owe $25,000 or more in back taxes.
  • You own a business or have complex tax situations.
  • You’ve already received a levy notice or lien notice.
  • You need help qualifying for currently not collectible status or an offer in compromise.

A tax attorney or enrolled agent can advise you on the best strategies and represent you before the IRS. This gives you the best chance of reducing penalties and interest and resolving the debt on favorable terms.

The Bottom Line

Having old tax debt hanging over your head is zero fun, trust me. But you do have options, including waiting out the 10-year limit in many cases. Just don’t stick your head in the sand – take action quickly when those IRS notices start rolling in. And consider getting professional help if your situation is complex. Relief is possible with the right approach!

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