Tax Collection Process

Tax Collection Process

Each tax collecting agency has a Collection Division. The Collection Division is very similar to a collection agency. However, unlike a collection agency, the Collection Division of a tax collecting agency has certain powers such as tax liens, levies, garnishment orders, seizure and sale of property, etc. The Collection Division is only concerned with collecting taxes, interest and penalties. Usually, before a tax problem gets to the Collection Division, all your appeal rights have exhausted, and the amount of money that you owe has been fixed.

Is there a statute of limitations for collection?

Sometimes. Some tax collecting agencies have a statute of limitations for collection. It varies from state to state and from agency to agency.

What is a statute of limitations?

A statute of limitation is a period allowed by the law, during which a tax collecting agency is permitted to collect unpaid tax obligations from the taxpayers.

What is the statute of limitations for IRS collections?

10 years (usually).

Can they put me in jail for not paying my taxes?

No. A long time ago, we abandoned the concept of "Debtor's Prison." If you owe money to the tax collector, there is no way that you can go to jail unless you have committed tax fraud and/or you are a tax protester.

Can a Collection Agent make an unannounced visit to my home?

Yes. A collection agent may personally visit your home unannounced, after attempting to contact you by letters and phone calls. Before a collection agent visits you, the agent may already know what type of cars, boats or other possessions you have, and where the agency may find you.

If I ignore the notices and letters wouldn't a tax collecting agency "write-off" the tax bill?

No. If you ignore the notices and letters you are attempting to evade the collection process. It would be in your best interest to respond to the notices and letters immediately.

What is a Tax Levy?

Please visit the page on Tax Levies.

What is a Tax Lien?

Please visit the page on Tax Liens.

What is a Garnishment?

Please visit the page on Garnishments.

What is a Seizure and Sale?

Please visit the page on Seizures and Sale.