IRS Collections Explained

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IRS Collections Explained

At Urgent Tax Services, we see all the time the need for people to deal with IRS Collections. There are a few helpful hints to remember when dealing with this.

IRS Collections

When filing a tax return with a tax liability, you must submit full payment of the tax liability no later than the due date. Otherwise, you WILL receive a bill from the Internal Revenue Service (IRS). Your first bill will include penalties and interest that have accrued from the due date.

There are several methods for paying the IRS Collections bill. One method allows you to call the IRS directly. Another method is to submit payments directly on the IRS website, IRS.GOV. Another option is to send the IRS a personal check or money order payable to the “United States Treasury.”

IRS Letters

You should expect to receive a letter from the IRS outlining – in great detail – all taxes, interest, and penalties currently due. Rest assured, the IRS is not taking any action at this time, and the purpose of the bill is only to remind you to pay the required amount by a designated due date (usually 30 days). The unpaid balance is subject to interest that compounds daily and a monthly late payment penalty. The penalty is the federal short–term interest rate (which fluctuates daily) plus 3 percent (+3%). It is in your best interest to pay your tax liability IN FULL, as soon as, you can to minimize the penalty and interest charges to your account. If you’re not sure how to read or interpret your IRS Letters, contact us, and we will guide you step-by-step.

The Next Steps


Each notice or letter should be read carefully, as it contains a lot of valuable information. Confirm your information, including your identity, income, expenses, and deductions. One wrong digit or letter can cause major issues. In addition, it is not uncommon that, after fully analyzing the tax debt, to see overcharged bills or errors made by the IRS computer system. In fairness to the IRS, collecting taxes from more than 130 million individuals (not to mention all the returns from corporations, partnerships, trusts, estates, and other assorted entities) under an extraordinarily complex tax system is, to say the least, difficult. So be sure to read!


No letter from the IRS or State Revenue Division should be ignored. Not replying timely, may accrue more penalties and interest charges. Most tax assessments include appeal rights, which expire within a designated amount of time. Bear in mind that most tax professionals resolve the majority of disputes with the Appeals Division. NEVER LIE TO THE IRS ABOUT ANY INFORMATION ON YOUR RETURN! However, even simple tax crimes from failing to report income to making up deductions are nothing to mess with. Tax returns are documents filed under penalties of perjury, not an “opening offer” from the taxpayer. Since some people seem to believe that, on tax returns, anything goes, it’s good to remember that it doesn’t. Simple reporting problems can lead to major consequences. So respond!

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