IRS Collections

The IRS collections process begins with a letter to you explaining the amount you owe, along with a demand for payment in full. The process will continue with added penalties and interest along the way, until the bill is paid in full or until the IRS may no longer legally collect the tax.

While the reality may be that this is an incorrect amount, or you may not even owe the IRS additional taxes, not taking action could result in tax liens, levies or even wage garnishment.

Nonfiling Of Taxes: What Happens If You Have Not Filed?

If you have not filed tax returns for several years, it is common to feel overwhelmed. Many individuals believe that avoiding the issue will limit contact with the IRS. In practice, ignoring unfiled returns often leads to escalating penalties, compounding interest and enforced collection actions such as wage garnishments or bank levies. Taking proactive steps can significantly expand your available resolution options.

A key issue involves the statute of limitations on collections. The IRS generally has 10 years to collect assessed taxes. However, that collection period does not begin until a return is filed and the tax is formally assessed. If returns remain unfiled, the clock may not start at all. Filing accurate returns can, therefore, be a necessary first step in triggering the limitations period and creating a defined timeline for resolution.

When returns are not submitted, the IRS may prepare a Substitute for Return, often referred to as an SFR. This default filing is based solely on income information reported to the government, without factoring in deductions, credits or filing status adjustments that could reduce liability. An SFR assessment frequently results in a higher tax balance than what is actually owed. A qualified tax debt attorney can review the IRS assessment and prepare corrected filings that reflect allowable deductions and exemptions.

Nonfiling can also expose taxpayers to multiple penalties. These may include:

• Failure to file penalties: Assessed monthly up to a statutory maximum.
• Failure to pay penalties: Added when balances remain unpaid.
• Interest accrual: Compounded daily on unpaid tax and penalties.
• Enforced collection costs: Additional fees if levies or garnishments are initiated.

In some cases, penalty abatement may be available if there was reasonable cause for the delay, such as serious illness, natural disaster or documented hardship. Tax debt attorneys evaluate whether the facts support such relief and prepare the necessary submissions. Voluntary disclosure is also important when criminal exposure is a concern. Coming forward before an investigation begins can reduce risk. An experienced IRS tax debt attorney or tax debt relief attorney can assess your circumstances and develop a structured plan to bring filings current and pursue appropriate collection alternatives.

Addressing nonfiling directly allows you to replace uncertainty with a defined strategy. With accurate returns on file and a clear understanding of your options, it becomes possible to move from reactive defense to structured resolution.

What Are My Options? Can I Make Payments?

Your payment options include, but are not limited to, paying the amount in full, agreeing to make an installment payment plan, offer in compromise, filing to temporarily delay collection, claiming an uncollectible status or filing for bankruptcy.

Naperville area accountants, financial planners and other lawyers frequently recommend our firm for their clients in need of qualified representation for IRS collections. Call 815-534-4402, toll free at 269-440-6890.

What Are My Rights As A Tax Payer?

You have the right to appeal decisions made by the Illinois Department of Revenue and the IRS by requesting a review or taking the matter to court. Additionally, you have a right to:

• Be informed
• Quality service
• Pay no more than the correct amount of tax
• Challenge the IRS’ position and be heard
• Finality
• Privacy
• A fair and just tax system
• Retain an attorney

What If My Appeal Has To Go To Court?

As a taxpayer, you are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties. This includes taking your case to tax court if necessary.

Get The Legal Help You Need

At Demetrius J. Karos, Ltd., our experienced representation works with you to present the facts and circumstances affecting your tax liabilities, ability to pay or ability to provide information to the IRS. Contact our firm to resolve your tax issue properly.