These frequently asked questions and answers are provided for general information only and should not be cited as any type of legal authority. They are designed to provide the user with information required to respond to general inquiries. Due to the uniqueness and complexities of Indian law and federal tax law, it is imperative to ensure a full understanding of the specific question presented, and to perform the requisite research to ensure a correct response is provided.
What payment options do I have after I receive a notice?
If you cannot pay in full, you should send in as much as you can with the notice. The unpaid balance is subject to interest compounded daily, and a monthly late payment penalty. It is in your best interest to pay your tax liability in full as soon as you can to minimize additional charges.
We may be able to offer you a monthly installment agreement. You can use the Online Payment Agreement (OPA) or you can complete and mail a Form 9465, Installment Agreement Request PDF with your bill. Please attach a voided check to your request to have your payment deducted from your bank account each month. Direct debit installment agreements provide you with the ability to make timely payments automatically reducing the possibility of your defaulting the agreement.
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:
- Filing a Notice of Federal Tax Lien,
- Serving a Notice of Levy; or
- 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.
Can the IRS file a lien against trust land?
No. Any interest in restricted land held in trust by the United States for an individual Indian (and not for a tribe) shall not be deemed to be property, or a right to property, belonging to such Indian.
However, any other 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.
Can the IRS levy against my per capita distribution for the collection of taxes owed?
Yes. If a levy is served upon the tribe against a member’s per capita distribution, the tribe is legally obligated to surrender the funds subject to the levy.