Six Recent Changes to the IRS Collections Process

July 5, 2017

According to the National Taxpayer’s Union, individual taxpayers spent almost 4 billion hours of their time complying with federal tax laws last year alone. While this number may seem inconceivable, when considering the amount of regulations, compliance requirements and updates to Internal Revenue Service (IRS) processes, it makes sense. If taxpayers do not comply with federal tax laws, or do not pay their fair share on time, they can face significant issues upon tax collection. And if you end up owing money to the IRS, it’s important to be aware of the six major changes recently made to the collection process:

1. Private debt collection has been established. This means private collection agencies (designated by the IRS) will now begin collecting outstanding inactive tax receivables (or amounts owed to a business) on behalf of the government. You will always receive a notice by mail that your account is being transferred to a private collection agency, so be wary of scam phone calls where individuals impersonate the IRS and request immediate payment. The IRS will always send several collection notices through mail before making any phone calls.

2. National Standards have gone up on financial forms used by the IRS. These standards help determine how much cash flow is available for you to meet your necessary living expenses (i.e., food, clothing, healthcare, etc.), and how it relates to your ability to pay a delinquent tax liability.

3. If filing for “Offer in Compromise” (which enables taxpayers to settle debt for less than the full amount owed based on specific circumstances), you must remain current for the entire evaluation process, and all returns must be filed on time. While the IRS has become slightly more relaxed with these cases, Offer in Compromise is not for everyone — before moving forward, it’s best to consult a tax attorney or other tax professional to help you make the most beneficial decision for your situation.

4. If your tax debt is over $50,000, you may have trouble traveling. In fact, your passport may be restricted and you could be deemed ineligible to fly. Details on this change are still light, but this law has been signed and must be taken into consideration, especially during the summer travel months.

5. The IRS is trying to expedite processing for installment agreement requests (monthly payment plans for those who cannot pay debts in their entirety) if the debt is between $50,000 and $100,000. This change makes more taxpayers eligible to qualify while simultaneously streamlining processing. Taxpayers will have up to 84 months to pay back debts, and although financial forms will not be required, a lien will be filed. Liens give creditors the right to sell collateral property of a debtor if they fail to meet certain payment obligations.

6. If you owe money to the IRS, locating your total tax debt payoff amount is far easier than it used to be. You will no longer have to dig through the mail, sift through old files or make hundreds of phone calls. Now, you can readily access this information online at after verifying your identity.

With these changes to the collections process in mind, we know how daunting federal and/or state tax laws can become — regardless of whether you or your business are in a difficult situation with the IRS or a state taxing authority. Post Polak Attorney Scott Novak has the passion and the expertise for assisting those individuals with questions, concerns or predicaments with taxes. From Tax Law to Tax Planning or Tax Disputes, we actively work with taxing agencies as well as our clients to reach clear, beneficial settlements. If you need legal assistance or advice relating to taxes, call Scott Novak today for your free consultation at (973) 228-9900 or contact us online