The IRS begins collection action by alerting taxpayers about the taxes owed. The IRS sends notices informing taxpayers about the amount of tax debt and how to resolve it. If after receiving multiple notices a taxpayer does not make efforts to resolve it, the IRS proceeds to aggressive collection actions.
Tax lien and tax levy are the most aggressive collection actions of the IRS. Under a tax lien, the IRS seizes the assets of a taxpayer to ensure payment of tax debt. If after a lien, the tax debt is not resolved, the IRS moves to levy. Under it, the IRS sells the seized property and/or assets to fulfil the tax debt.
It is important to note that the IRS seeks resolution of tax debt, which does not necessarily imply paying off the entire tax debt amount. There are various tax debt payment plans that allow taxpayers reduction in tax debt, or payment in installments. They may explore IRS debt payment plans to find the most comfortable method to resolve their tax debt.
Taxpayers must resolve their tax debt at the earliest to avoid paying an additional amount in IRS penalties and interest. Earliest resolution of tax debt is the most beneficial for taxpayers, as it helps them to avoid IRS collection actions and additional penalties and interest.