IRS collection efforts begin, but don’t end, where you file your tax returns. The IRS goal is to collect the tax using as little manpower as possible. That’s why you receive so much computer generated paper from the IRS including tax bills and Notices of Federal Tax Liens. In most cases, no one is going to contact you, that is, no human being, until your account is at least six months overdue and, often, it’s longer than that. If you owe less than $1,000 it is unlikely anyone will ever look at your account.
Once a tax return has been posted to your account, you will receive an automated notice from the IRS known as a CP. Your file is then designated as a tax delinquency account or TDA. Usually the first letter is not very threatening; it’s simply a balance due letter. If you don’t pay the balance in about a month, you will then receive more computer generated notices. If you have other outstanding bills the IRS will probably increase the frequency of the notices to you.
Here are some of the notices you may receive. After the initial “friendly” notice, the IRS will send you the following: CP-501 Reminder Notice – Balance due; CP-504 Urgent Notice – Intent to Levy; and CP-503, Immediate Action is Required. If you don’t respond to these, eventually you will get a CP-207 Final Notice – Intent to Levy. Once you receive the final notice, the CP-207, you don’t need to panic. However, you do need to take action because your days are now getting very short. Panic won’t help; action will. At some point, the IRS will send you Publication 594, the Collection Process, which describes what the IRS can legally do to collect from you. You may want to read it, it’s kind of scary, but it’s better to be informed because there is plenty they can do.
If you don’t pay during the computerized notice series described above, your file will be sent to the IRS Automated Collection System which is known as ACS. ACS operates by mail and by phone, and they have the power to collect taxes and levy assets and wages.
The ACS computers automatically analyze accounts and make phone calls. IRS clerks sit in front of the computer and follow scripts demanding payment. Keep in mind ACS has the ability to send collection letters and issue levies to third parties that may owe you money such as banks and employers.
Your file can stay with the IRS for as long as the IRS has to collect from you, or it could eventually end up in the hands of a local field officer known as a revenue officer.
Whether or not you are assigned to a local revenue officer depends upon many factors, but chief among those factors is the amount you owe, whether or not you have a history of tax delinquency and the number of tax years for which you owe. The age of your tax debt is also a factor because as you get closer to the statute of limitations, you are more likely to be handed off to a local revenue officer who can give you personal attention.