The IRS Collection machine is intimidating. It’s set up that way to encourage voluntary compliance with stiff penalties, high interest rates and intimidating collection tactics. Of course, voluntary compliance is the easiest way to avoid the IRS Collection cross hairs. But for some, extraordinary circumstances cause a lapse in tax compliance and a mounting back tax liability. If you’re tackling a back tax liability, especially a payroll taxes, you need to know how to protect yourself and your business. One rule to live by while dealing with the IRS Collection group or your State Taxing Authorities collection group is that nothing is real until it’s in writing.
Steve Precht, an M&M Enrolled Agent, consults with business owners from across the country everyday about their past due employment taxes. Recently Steve and I were discussing some of the confusion our prospective clients have about IRS Collection procedures. One big issue was the difference between a Voluntary Monthly Payment Arrangement and a Formal IRS Installment Agreement (IA). There is a big difference that many struggling taxpayers don’t seem to pick up on. Continue reading