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ITG FAQ Answer #3-What actions can the IRS take to collect taxes?

It is important to contact IRS and make arrangements to pay the tax due voluntarily. If you do not IRS may take action to secure payment.

Some of the actions the IRS may take to collect taxes include:

  1. Filing a Notice of Federal Tax Lien,
  2. Serving a Notice of Levy; or
  3. Offsetting a refund to which you are entitled.

The federal tax lien is a claim against your property, including property that you acquire after the lien is filed. By filing a Notice of Federal Tax Lien, the government establishes its interest in your property as a creditor in competition with other creditors in certain situations, such as bankruptcy proceedings or sales of real estate. A federal tax lien may appear on your credit report and may harm your credit rating. Once a lien is filed, the IRS generally cannot issue a "Certificate of Release of Federal Tax Lien" until the taxes, penalties, interest, and recording fees are paid in full or the IRS may no longer legally collect the tax.

A Notice of Levy is another method the IRS may use to collect taxes. Levying means that the IRS can confiscate and sell property to satisfy a tax debt. This property could include your car, boat, or real estate. The IRS may also levy assets such as your wages, bank accounts, Social Security benefits, and retirement income. In addition, the IRS will apply future federal tax refunds that you are due, to offset the amount you owe. Any state income tax refunds you are owed may also be applied to your liability.

Assets, such as, but not limited to, improvements such as buildings on trust land, vehicles, bank accounts, earnings, and fee simple land, owned by individuals,  are subject to seizure, Federal Tax Liens, garnishments, and levies.

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Page Last Reviewed or Updated: 15-Aug-2014