The IRS has far greater powers than any other bill collector: The IRS has the power to take your wages, bank accounts, and other property without first granting you a hearing. Nevertheless, you aren't entirely at the IRS's mercy. Here are some tips that may help you if an IRS collector is at your heels.
- The IRS collection process starts with computerized form letters, which should not be ignored. If you can't pay, request more time by sending a letter back.
- Carefully prepare your financial information before speaking with the tax collector. Make sure you don't understate your living expenses.
- Avoid giving bank account and employment information to the IRS over the phone.
- If you don't want to deal with an IRS collector over the phone, request that your file be sent to the local district office so you can meet with a tax collector to work out a payment arrangement.
- Treat a collector with respect but remember you have rights. Read IRS Publication 1, which explains the Taxpayers' Bill of Rights.
- Never lie to an IRS employee about your assets or anything else. It is a crime.
- If you can't pay your taxes all at once, you can propose an installment agreement. If you get an agreement approved, keep to it.
- It is possible, but never easy, to reduce your tax debts through something called an offer in compromise.
- Bankruptcy may work to cancel tax debts or let you pay over time without interest and penalties accruing.
- If you are in dire financial straits, ask the IRS to suspend its collection for financial hardship if your income is very low or if you are out of work.
To Learn More
For tips and insider information on how to deal with the IRS if you can't afford your bill or you get audited, see Stand Up to the IRS, by Frederick Daily (Nolo).