US Internal Revenue Service: p594

8/14/2019 US Internal Revenue Service: p594

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Publication 594 (Rev. 7-2007)

Catalog Number 46596B

IRS Mission:

Provide Americas taxpayers top quality serviceby helping them understand and meet their tax

responsibilities and by applying the tax law withintegrity and airness to all.

The IRS Collection ProcessPublication 594 Keep this publication for future reference

This publication tells you the steps the Internal Revenue Service (IRS) may take tocollect your balance due account. We send this publication with your nal bill i ourrecords show you owe overdue tax, penalty, or interest. We may:

contact you by telephone, assign a revenue ocer to resolve your account (the revenue ocer may contact

you in person), and/or

take enorced collection action to collect the amount you owe.We urge you to resolve your account to prevent possible enorcement action.

Please pay immediately i you owe the amount shown on the bill. Contact us now i you believe the bill is incorrect so that we may correct any

mistakes.

Page 2 o this publication provides inormation about how to contact us. We willwork with you to solve your tax problem.

A number o IRS orms and publications apply to various situations discussed inthis publication. To obtain these orms and publications, please visit our web site www.irs.gov, call us at 1-800-TAX- FORM (1-800-829-3676), write to us, or visit your

local library or IRS oce.

Please note that the inormation in this document applies to all taxpayers including

individuals who owe income tax and employers who owe employment tax. A separatesection on page 11 describes special rules that apply to employers only.

This document includes a summary o your rights and responsibilities concerningpaying Federal taxes, in addition to discussing the legal authority that allows the IRS to

collect taxes. Publication 594 is not a precise and technical analysis o the law; it is orinormation only.

en espaol

Existe una versin de esta publicacin en espaol, la Publicacin 594SP, que puede

obtener en la ocina local del Servicio de Impuestos Internos.


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Information contained in this publication

Important Information You Should Know 4

What to Do When You Owe Taxes 5

Options to Pay Your Taxes 5

What If You Cannot Fully Pay Your Taxes? 5

About IRS Actions During the Collection Process 7

Offset 7

Liens 7

Levies 8

Summons 10

Collection of Employment Taxes 11

Referral to a Private Collection Agency 12

Boxed highlights

What to do when you receive a bill from the IRS 3

Avoid having overdue taxes next year 3

What if you believe your bill is wrong? 3

There is a special program to help you 5

Especially for employers 10

Some property cannot be levied or seized 11

We offer you a number of free publications and forms 12

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Avoid having overdue taxes next year

I you owe taxes because you did not have enoughmoney withheld rom your income, you should

claim a lower number o allowances on your Fo allowances on your ForormmW-4 or Form W-4P. See Publication 919, How DoI Adjust My Tax Withholding?

Take advantage o the Electronic Federal Tax

Payment System. (See Publication 966, ElectronicChoices to Pay All Your Federal Taxes, check ourwebsite at www.etps.com, or call 1-800-555

4477.)

I you owe tax, you should increase your estimatedtax payments. See Publication 505, Tax

Withholding and Estimated Tax.

I you are an employer, see Publication 15, CircularE, Employers Tax Guide.

What if you believe your bill is

wrong?

I you believe your bill is wrong, let us know assoon as possible.

write to the IRS oce that sent you the bill, call the IRS oce that sent you the bill, or visit your local IRS oce.

To help us correct the problem, gather a copy othe bill along with copies o any records, tax returns,

and canceled checks, etc., that will help us understand

why you believe your bill is wrong.

I you write to us, tell us why you believe your billis wrong. With your letter, include copies o all the

documents you gathered to explain your case. Pleasedo not send original documents. I we nd you are

correct, we will adjust your account and, i necessary,send you a corrected bill.

Important information you should know

You have the right to be treated proessionally, airly, promptly, and courteously by IRS employees and Private Collection Agencies (PCAs) contacting you on

behal o the IRS. Among other rights, you have the right to:

disagree with your tax bill, meet with an IRS manager i you disagree with the IRS employee who handles your tax case, appeal most IRS collection actions, have your case transerred to a dierent IRS oce i you have a valid reason (such as i you move), be represented by someone when dealing with IRS matters, and receive a receipt or any payment you make.

For details about your rights, see Publication 1, Your Rights as a Taxpayer. You received a copy o it with your rst bill.

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Important information you should

know

If you want someone to represent you

When dealing with the Internal Revenue Service

(IRS), you may choose to represent yoursel,

or you may have an attorney, a certifed public

accountant, an enrolled agent, or any person

enrolled to practice beore the IRS represent you.

For example, you may want your representative torespond to a tax bill that you believe is incorrect.

Also, you can be represented by a member o

your immediate amily, or in the case o a business,

by regular ull-time employees, general partners

or bona fde ofcers.

I you want your representative to appear

without you, and to receive or inspect confdential

material, you must fle a Form 2848, Power of

Attorney and Declaration of Representative, with

the IRS. You may also authorize an individual to

receive or inspect confdential material, but not

represent you beore the IRS, by fling a Form8821, Tax Information Authorization.

Other items to note

The IRS can share your tax informationBy law, the IRS can share your tax inormation

with city and state tax agencies, and in some

cases with the Department o Justice, other

ederal agencies, and people you authorize.

We can also share it with certain oreign

governments under tax treaty provisions.

We may contact a third partyThe law allows us to contact someone else,

such as neighbors, banks, employers, or

employees, to investigate your case. You

have the right to request a list o third parties

contacted with respect to your case.

Low Income Taxpayer Clinics (LITCs)LITCs are independent organizations

that provide low income taxpayers with

representation in ederal tax controversies with

the IRS or ree or or a nominal charge. The

clinics also provide tax education and outreachor taxpayers with limited English profciency

or who speak English as a second language.

Publication 4134, Low Income Taxpayer Clinic

List, provides inormation on clinics in your

area. It is available at www.irs.gov, your local

IRS ofce, or by calling 1-800-TAX- FORM

(1-800-829-3676).

If you are involved in bankruptcyproceedings

Call the number on your tax bill or 1-800-829

1040 i you cannot fnd the bill, or contact your

local IRS ofce. While the proceeding may not

eliminate your tax debt, it may temporarily stop

the IRS rom collecting.

Help for an innocent spouseGenerally, both you and your spouse are

responsible, jointly and individually, or paying

any tax, interest, or penalties due on your jointreturn. In some cases, a spouse (or ormer

spouse) may be relieved o liability on a joint

return. For more inormation, see Publication

971, Innocent Spouse Relief. I you believe

you should not be held responsible or any joint

liability, you must fle a claim or relie on Form

8857, Request for Innocent Spouse Relief.

You must fle Form 8857 within 2 years ater

the frst date the IRS attempted to collect the

tax ollowing July 22, 1998. Collection activity

that starts the two-year period includes:

A reund oset notice dated March 7, 2005or later. (A reund oset notice advises

you that the IRS applied your income tax

reund to an amount you owed on a joint

tax return.)

A claim or the joint liability fled in aproceeding which involves your property, or

example, a proo o claim in a bankruptcy

proceeding.

The fling o a suit by the United Statesagainst you to collect the joint liability.

The issuance o a notice inorming you othe IRS intent to levy and your right to a

Collection Due Process (CDP) hearing with

respect to a joint liability.

Appeal processI you disagree with the decision o an IRS

employee at any time during the collection

process, you may ask that employees manager

to review your case.

When you ask or a review, the employee will

reer you to a manager. The manager will either

speak with you then or will return your call by thenext work day.

I you disagree with the managers decision,

you have the right to fle an appeal under the

Collection Appeals Program. This program

enables you to appeal most collection actions

we may take, including fling a lien, placing a

levy on your wages or bank account, or seizing

your property. You also will have an opportunity

to request a CDP hearing with the IRS Ofce o

Appeals ater the initial fling o a Notice of Federal

Tax Lienor each liability You also will have an

opportunity to request a CDP hearing prior to the

initial levy action, unless collection o the tax is in

jeopardy or the levy is on your state tax reund. In

these two cases, you may ask or a CDP hearing

ater the levy. See Publication 1660, Collection

Appeal Rights, or more inormation.

Time period for collecting taxesBy law, the IRS has the authority to collect

outstanding Federal taxes or 10 years rom

the date your tax liability was assessed. The

10-year collection period is suspended:

while the IRS and the Ofce o Appealsconsider a request or an installment

agreement or an oer in compromise.

rom the date you request a CDP hearinguntil Appeals issues a CDP Notice of

Determinationor, i you seek review in the

Tax Court, until the Tax Courts decision

becomes fnal, including appeals to a United

States Court o Appeals.

rom the date you request innocent spouserelie until a fnal Notice of Determination

is issued or, i you seek review in the Tax

Court, the date the Tax Court decision

becomes fnal and or 60 days thereater.

I, however, you appeal the Tax Courts

decision regarding your right to innocent

spouse relie to a United States Court o

Appeals, the collection period will begin to

run 60 days ater the fling o the appeal

unless a bond is posted with the appeal.

or tax periods included in a bankruptcywhile the automatic stay is in eect, plus an

additional six months.

while you are residing outside the UnitedStates, i you are absent or a continuous

period o at least six months.

The amount o time the suspension is in eect

will be added to the time remaining in the 10

year period. For example, i the 10-year period

is suspended or six months, the time let in the

period we have to collect will increase by six

months.

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There is a special program to help you with tax problems that cannot

be resolved through normal IRS channels

The Taxpayer Advocate Service is an independent organization within the IRS whose employeesassist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems

that have not been resolved through normal channels, or who believe that an IRS system or procedureis not working as it should. You may be elig ible or assistance i you:

are experiencing economic harm or signifcant costs (including ees or proessional representation), have experienced a delay o more than 30 days to resolve your tax issue, or have not received a response or resolution to the problem by the date promised by the IRS.

The service is ree, confdential, tailored to meet your needs, and available or businesses as wellas individuals. There is at least one local taxpayer advocate in each state, the District o Columbia, and

Puerto Rico. Because advocates are part o the IRS, they know the tax system and how to navigate it.I you qualiy, you will receive personalized service rom a knowledgeable advocate who will:

listen to your problem, help you understand what needs to be done to resolve it, and stay with you every step o the way until your problem is resolved.

You may contact the Taxpayer Advocate Service by:

calling their toll-ree case intake line at 1-877-777-4778 or TTY/TTD 1-800-829-4059, or writing or calling your local taxpayer advocate, whose address and phone number are listed in

the government listings in your local telephone directory and in Publication 1546, The TaxpayerAdvocate Service of the IRS How to Get Help With Unresolved Tax Problems,

fling Form 911,Application for Taxpayer Assistance Order, with the Taxpayer Advocate Service, or asking an IRS employee to complete Form 911 on your behal.

To get a copy o Form 911 or learn more about the Taxpayer Advocate Service, go to www.irs.gov/advocate.

What to do when you owe taxes

Options to Pay Your Taxes

When you fle your tax return, we check to

see i the math is accurate and i you have paidthe correct amount. I you have not paid all youowe, we send a bill called a Notice of Tax Due

and Demand for Payment. The bill includes thetaxes plus interest and penalties. It is in your best

interest to pay your tax liability in ull to minimize

the amount o interest and penalty charged. Youmay pay your taxes by credit card, electronicunds transer, check, money order, or cash. Takeadvantage o the Electronic Federal Tax Payment

System (EFTPS) to pay by electronic undstranser. See Publication 966, Electronic Choices

to Pay All Your Federal Taxes, access the websiteat www.etps.com, or call 1-800-555-4477.

Credit card options are available through twoservice providers. The credit card payment service

providers will charge a ee or this service. Fees

are based on the amount o the payment and mayvary by service provider. Taxpayers may initiate acredit card payment by contacting:

Link2Gov Corporation at 1-888-PAY1040 (1888-729-1040) or online at www.pay1040.

com, or

Ofcial Payments Corporation at 1-8002PAYTAX (1-800-272-9829) or online at

www.ofcialpayments.com.

It may be to your advantage to pay byborrowing. The interest rate your credit card issueror bank charges may be lower than the combi

nation o interest and penalties imposed by theInternal Revenue Code. For urther inormation on

interest and penalty rates, see Notice 746, Infor-mation About Your Notice, Penalty, and Interest.

What If You Cannot Fully Pay YourTaxes?

I you cannot pay all your taxes immediately,pay as much as you can now because by paying

now, you will reduce the amount o interest andpenalty you will owe. Then immediately call,

write, or visit the nearest IRS ofce to explain yoursituation.

Ater you explain your situation, we mayask you to complete a Collection Inormation

Statement and provide documentation to substan

tiate your inormation. Collection InormationStatements (Form 433-F, Collection Information

Statement (ACS), Form 433-A,Collection Infor-mation Statement for Wage Earners and Self

Employed Individuals, and Form 433-B,CollectionInformation Statement for Businesses) help us

compare your monthly income with your monthlyexpenses to determine the amount you can pay.Based on your situation, we may work with you to

consider several dierent ways to pay:

You may be able to make monthly paymentsthrough an installment agreement. We can set

up a direct debit rom your fnancial institutionor a payroll deduction rom your wages orsalary. (See page 6.)

You may qualiy or a temporary delay i yourcase is considered a hardship. (See page 6.)

In some cases, you may qualiy or an Oer inCompromise. (See page 6.)

Request an Installment Agreement

Installment agreements allow the payment o

your debt in smaller, more manageable amounts.Installment agreements generally require equal

monthly payments that will result in ull payment othe tax you owe within the time let in the 10-yearperiod during which the IRS can collect the tax

rom you. I you cannot pay your tax in ull by theend o the collection period, but can pay some

o the tax you owe, you may qualiy or a partialpayment installment agreement. Go to www.irs.

gov or more inormation about partial paymentinstallment agreements.

For all installment agreements, the amounto your installment payment will be based onthe amount you owe and your ability to pay that

amount within the time let in the 10-year period.To be eligible or an installment agreement,

you must fle all required returns. I you are anemployer, you must be current with ederal tax

deposits.

I you owe less than $25,000, you may be

eligible to use our Online Payment Agreementweb application. To access the application, goto www.irs.gov. Use the pull-down menu under

I need to... and select Set Up a Payment

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Plan. (The direct link to the Online PaymentAgreement is http://www.irs.gov/individuals/article/

0,,id=149373,00.html)

You may also request an installment agreement

using Form 9465, Installment Agreement Request,or Form 2159, Payroll Deduction Agreement, by

calling the number on your bill, or 1-800-8291040 i you cannot fnd your bill or by visiting your

local IRS ofce. I you choose to complete one o

these orms to apply or an installment agreement,you should mail the completed orm to the

address listed on your bill.

When you arrange or an installment

agreement, it may be to your advantage to payby electronic unds withdrawal rom your fnancial

institution (Line 13 o Form 9465) or payrolldeduction rom your wages (Form 2159). Thesetwo types o payment arrangements will help you

avoid termination o your installment agreement byensuring timely payments and preventing enorced

collection action. These types o agreements

will also reduce the burden o having to mail thepayments and will save you postage.

A user ee will be charged to set up your

installment agreement. The ee is $52 or directdebit installment agreements, where payments arededucted directly rom your fnancial institution,

and $105 or other agreements. Taxpayers withincome at or below established levels, based on

the Department o Health and Human ServicesPoverty Guidelines, may apply and be qualifed to

pay a reduced user ee o $43 or establishingnew agreements, including direct debit installment

agreements.

We generally cannot levy against your property:

while your request or an installment agreementis being considered,

while your agreement is in eect, or 30 days ater your request or an

agreement has been rejected,

or 30 days ater our termination o aninstallment agreement (due to your deault o

the agreement), or

while your appeal o the rejection or termination is being evaluated by the IRS Ofce o

Appeals..

However, a Notice o Federal Tax Lienmay be

fled to secure the Governments interest againstother creditors. (See page 7.)

I you already have an approved installmentagreement rom a previous tax debt and your

fnancial situation has changed, we may be able to

modiy your monthly amount. A reinstatement eeo $45 will be charged, regardless o income level,

i we change the monthly amount at your request.You may have to complete a Collection Inormation

Statementexplaining your fnancial situation.

I you have requested an installment

agreement, and a decision to grant this agreementis pending, it is recommended that you make

voluntary payments while approval is pending.

Acceptance o these interim payments by theIRS should not be construed as acceptance o

the proposed installment agreement. You willbe notifed in writing regarding the acceptance

or rejection o your request or an installmentagreement. You may ask the IRS Ofce o

Appeals to review our rejection o your installmentagreement. See Publication 1660, Collection

Appeal Rights, or more inormation.

Termination o your installment agreementmay cause the fling o a Notice o Federal Tax

Lienand/or an IRS levy action. You may ask the

IRS Ofce o Appeals to review our terminationo the installment agreement due to your deault.See Publication 1660, Collection Appeal Rights,or more inormation. Either the fling o a lien

or a levy can be very damaging to your creditworthiness and cause fnancial difculties. I

a deaulted agreement is reinstated, the reinstatement ee o $45 will be charged, regardless

o your income level.

Request a Temporary Delay in theCollection Process

I we determine that you cannot pay any o

your tax debt, we may temporarily delay collectionuntil your fnancial condition improves. You shouldknow that i we do delay collecting rom you, yourdebt will increase because penalties and interest

are charged until you pay the ull amount. Duringa temporary delay, we will again review your ability

to pay. We may also fle a Notice o Federal TaxLien(see page 7) to protect the Governments

interest in your assets.

Apply for an Offer in Compromise

The IRS may accept an Oer in Compromise(OIC) to settle unpaid tax accounts or less than the

ull amount o the balance due. This applies to alltaxes, including any interest, penalties, or additionalamounts arising under the Internal Revenue laws.

The OIC program is an option or those taxpayerswho are unable to pay their tax account in a lump

sum or through an installment agreement andhave exhausted their search or other payment

arrangements.

The IRS may legally compromise a tax liability

or one o the ollowing reasons:

Doubt as to liability - there is doubt as towhether or not the assessed tax is correct,

Doubt as to collectibility - there is doubtthat you could ever pay the ull amount o the

tax owed. In these cases, the total amountyou owe must be greater than the sum o your

assets and uture income, or

Promote effective tax administration- there is no doubt that the assessed tax iscorrect and no doubt that the amount owedcould be collected, but you have an economic

hardship or other special circumstances whichmay allow the IRS to accept less than the total

balance due.

For oers received ater July 16, 2006, there

are three types o OIC payment terms that theIRS and the taxpayer may agree to:

Lump Sum Cash - must be paid within 5 orewer installments rom notice o acceptance.

Short Term Periodic Payment - must bepaid within 24 months (2 years) rom the date

the IRS receives the OIC.

Deferred Periodic Payment - must be paidwithin 25 months or longer, but within the timeremaining on the 10-year period or collection.

An OIC submitted as a lump sum cash oer,

must include the $150 application ee and anonreundable payment o 20 percent o the

oered amount, with the balance to be paid inno more than 5 installments rom the notice o

acceptance.

An OIC submitted as a periodic payment

oer (short term or deerred) must include the$150 application ee and a nonreundable initialproposed periodic payment with the oer. The

remaining proposed periodic payments mustcontinue to be made while the oer is being

evaluated.

Taxpayers with income at or below established

levels, based on the Department o Health andHuman Services Poverty Guidelines, are notrequired to submit the $150 application ee, 20%

o the amount o a lump sum cash oer, the frstinstallment o a periodic payment oer, or subse

quent installment payments or a periodic paymentoer while that oer is being evaluated, as

described above. Until urther guidance is issued,you should use the worksheet to Form 656-A,

Income Certifcation or Oer in Compromise

Application Fee, to determine i you qualiy as alow-income taxpayer who is not required to make

these payments. The worksheet may be ound inForm 656, Oer in Compromise.

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You may submit an OIC by completing Form

656. I you are basing your oer on doubt

as to collectibility or promotion o eective tax

administration, you must also submit Form 433-A,

Collection Inormation Statement or Wage Earners

and Sel-Employed Individualsor Form 433-B,

Collection Inormation Statement or Businesses,

with supporting documentation. There may be

instances where both a Form 433-A and Form

433-B must be submitted. Ater acceptance oan oer, you must remain current with fling and

paying requirements or fve years or until the

amount o the oer is paid in ull, whichever is

longer. You may ask the IRS Ofce o Appeals to

review our rejection o your Oer in Compromise.

See Publication 1660, Collection Appeal Rights,

or more inormation.

For additional inormation about the OIC

program, visit www.irs.gov or see Form 656, Oer

in Compromise.

About IRS Actions During theCollection Process

Beore we take any enforced collection

action explained in this section, we will contact

you to give you a chance to voluntarily pay what

you owe. We will send you a Notice o Tax Due

and Demand or Payment, a bill that tells you how

much you owe in taxes. We may send you other

bills asking or payment. I you have an income

tax reund, we will oset the reund against your

tax liability. I you do not pay your taxes in ull and

do not contact us to let us know why you cannotpay or why you disagree with our decision to take

enorcement action, the law requires us to take

action. We may:

File a Notice of Federal Tax Lien againstyour property (make a legal claim to your

property as security or the payment o your tax

debt) (see the inormation below),

Serve a levy on your property or salary (legallyseize your property to satisy a tax debt) (see

page 8),

Serve a Summons to secure inormation,records, or testimony (see page 10), or

Assess a trust fund recovery penalty orthe ailure to pay withheld employment taxes or

collected excise taxes (see page 11).

These actions are the methods we can use

to enorce the Notice o Tax Due and Demand

or Payment. On the ollowing pages, we explain

collection actions or inormation gathering tools,

and the rules that govern them.

Offset

I you have overpaid your taxes or one tax

period, but owe taxes or another, the law allows

us to apply your reund to reduce the unpaid tax.

I you are a non-liable spouse and we oset a

Federal income tax reund belonging to you and

your liable spouse, you may request return o your

share o the reund by fling Form 8379, Injured

Spouse Allocation. See Publication 4183, Injured

Spouse Claims, or more inormation.

Liens

Liens give us a legal claim to your property as

security or payment o your tax debt. The ederal

tax lien arises when:

we assess the liability, we send you a Notice and Demand or

Payment, and

you neglect or reuse to ully pay the debtwithin 10 days ater we notiy you about it.

We then may fle a Notice o Federal Tax Lien

in the public records. By fling a Notice o Federal

Tax Lien, your creditors are publicly notifed that

we have a claim against all your property, including

property you acquire ater the lien was fled.

The lien attaches to all your property (such

as your house or car) and to all your rights to

property (such as the accounts receivable o your

business).

Once a lien is fled, your credit rating

may be harmed. A lien may aect your

ability to get a loan, buy a house or acar, get a new credit card, or sign a

lease.

Releasing a lien

Usually 10 years ater a tax is assessed, a lien

releases automatically i we have not fled it again

or issued a Certifcate o Release o Federal Tax

Lien.

We will issue a Certifcate o Release o the

Federal Tax Lien:

within 30 days ater we determine that the taxdue (including accrued interest and penalties

and other additions) is satisfed by paying the

debt and/or by having it adjusted, or

within 30 days ater we accept a bond that yousubmit, guaranteeing payment o the debt.

You must pay all ees that a state or other

jurisdiction charges the IRS to fle and release the

lien. These ees will be added to the amount you

owe. See Publication 1450, Instructions on How

to Request a Certifcate o Release o Federal Tax

Lien.

We will issue a Certifcate o Release o Federa

Tax Lienwithin 14 days ater we determine that

at the time the IRS fled the Notice o Federal

Tax Lienthe taxpayer had no outstanding tax

liability due or the periods listed on the Notice,

the assessment was invalid, or the time period or

collecting the tax ended.

I we knowingly or negligently do not release

a Notice o Federal Tax Lienwhen it should be

released, you may be entitled to recover economic

damages. Some limitat ions may apply. You must

fle an administrative claim with the IRS Technical

Services Advisory Group assigned to your state,

area or county where you live or in which the

Notice o Federal Tax Lienwas fled. Mail your

written claim to the attention o the Advisory Group

Manager at the address listed in Publication 4235

Technical Services (Advisory) Group Addresses.

I the claim is denied, you may sue the Federal

Government, but not IRS employees, or economicdamages.

Payoff amount

The amount shown on the Notice o Federal

Tax Lienis the unpaid balance on the date the

Notice is created. The Notice will not be updated

to show changes in the amount you owe that

occur because o the accrued interest and

additions to tax or because o your payments.

However, at any time, you may request an updated

lien payo amount to show the remaining balance

due by calling the toll-ree customer service

telephone number at 1-800-913-6050. An IRSemployee will issue you a letter with the current

amount that must be paid beore we release the

Notice o Federal Tax Lien.

Applying for a discharge of the tax lienfrom property

I you sell property subject to a tax lien, such

as your home, or pay your tax liability equal to the

value o the property secured by the tax lien, you

may apply or a Certifcate o Discharge. Each

application or a Certifcate o Dischargeo a tax

lien requests release o the lien against one piece

o property. Note that when certain conditionsexist, a third party may also request a Certifcate o

Discharge. For instructions regarding how to apply

or a certifcate o discharge, see Publication 783,

Instructions on How to Apply or a Certifcate o

Discharge o Property rom Federal Tax Lien.

I you are selling your primary residence, you

may apply or a taxpayer relocation expense

allowance. In general, this allowance will be

granted i the IRS determines you are unable to

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pay relocating expenses, but certain conditions andlimitations apply. You may apply or the relocating

expense allowance by submitting Form 12451,

Request or Relocation Expense Allowance, to the

IRS.

Making the tax lien secondary to anotherlien

In some cases, a creditor may reuse to extendcredit to you unless their lien will be satised

beore the tax lien. Subordination is the processthat can make a Federal tax lien secondary to

another lien. For example, you may ask or asubordination o the tax lien to renance themortgage on your house. For more inormation,

see Publication 784, How to Prepare an Appli-cation or a Certifcate o Subordination o Federal

Tax Lien.

Withdrawing a Notice o Federal Tax Lien

We will withdraw a Notice o Federal Tax Lienithe Notice was led during a bankruptcy automatic

stay period.

We may withdraw a Notice o Federal Tax Lieni we determine:

the Notice was led too soon or not accordingto IRS procedures,

withdrawal will allow you to pay your taxesmore quickly, or

withdrawal would be in your best interest (asdetermined by the National Taxpayer Advocate)

and the best interest o the Government.

We will give you a copy o the withdrawal, andi you send us a written request, we will send acopy to other institutions you name.

Appealing the fling o a Notice o FederalTax Lien

We are required by law to give written notice

o your right to a Collection Due Process (CDP)hearing not more than 5 business days ater the

rst ling o a Notice o Federal Tax Lienor eachtax liability. Normally, we will notiy you by certiedmail sent to your last known address, although we

may give you this notice in person, or leave it at

your home or your usual place o business. Youmay request a CDP hearing with the IRS Oceo Appeals by sending a request or a hearing to

the address shown on your notice. You must leyour request by the date shown on your notice.Reer to Form 12153, Request or a Collection

Due Process or Equivalent Hearing, or moreinormation about ling a hearing request and or a

list o issues you may wish to discuss at your CDPhearing.

At the conclusion o your CDP hearing, the

IRS Oce o Appeals will issue a determination.Appeals may determine that the Notice o Federal

Tax Lienshould remain led, or it may determinethat the Notice o Federal Tax Lienshould be with

drawn or the lien should be released, dischargedor subordinated. You will have 30 days ater the

date o the determination, to seek review o thedetermination in the United States Tax Court. Inaddition, you may appeal under the Collection

Appeals Program (CAP), the proposed ling o aNotice o Federal Tax Lienor the actual ling o

a Notice i CDP rights are not available. You mayalso appeal, under CAP, our denial o your request

or withdrawal o the Notice o Federal Tax Lienand our denial o your request or a Certifcateo Dischargeor a Certifcate o Subordination

o Federal Tax Lien. See Publication 1660,

Collection Appeal Rights, or more inormation.

I a Notice o Federal Tax Lienis led tocollect your tax liabilities, call the number on the

notice inorming you that a lien has been led, or1-800-829-1040 i you cannot nd the notice.

The contact person listed on the notice or otherrepresentative will answer your questions andattempt to resolve your tax problem. You also may

ask the representatives manager to review yourcase. I the matter is still unresolved, the manager

can explain your rights to appeal to the IRS Oceo Appeals.

Levies

A levy is a legal seizure o your property tosatisy a tax debt. Levies are dierent rom liens.

A lien is a claim used as security or the tax debt,while a levy actually takes the property to satisy

the tax debt.

I you do not pay your taxes (or make arrangements to settle your debt):

we could seize and sell property that you hold(such as your car, boat, or house), or

we could levy property that is yours but isheld by someone else (such as your wages,

retirement accounts, dividends, bank accounts,rental income, accounts receivables, the cash

value o your lie insurance, or commissions).

We usually levy only when the ollowing threeconditions have occurred:

we assessed the tax and sent you a Notice andDemand or Payment,

you neglected or reused to pay the tax, and we sent you a Final Notice o Intent to Levy and

Notice o Your Right to A Hearing(levy notice)at least 30 days beore the levy. We usually

send this notice to your last known address

by certied mail, return receipt requested, butwe may give this notice to you in person, or

leave it at your home or your usual place obusiness. Please note: I we levy your state tax

reund, we may send you a Notice o Levy onYour State Tax Reund Notice o Your Right to

Hearingater the levy.

Appealing a levy

You may request a CDP hearing with the Oceo Appeals by sending a request or a CDP hearing

to the address shown on your notice. You mustle your request within 30 days o the date onyour notice. Reer to Form 12153, Request or

a Collection Due Process or Equivalent Hearing,

or more inormation about ling a hearing request

and or a list issues you may wish to discuss atyour CDP hearing.

At the conclusion o your hearing, the Oceo Appeals will issue a determination. You willhave 30 days ater the date o the determination

to seek review o the determination by the United

States Tax Court. In addition, you may appeala proposed or actual levy under the Collection

Appeal Program i CDP rights are not available.

See Publication 1660, Collection Appeal Rights,or more inormation.

I your property is levied or seized, call thenumber on the notice inorming you that a levy orseizure has occurred, or 1-800-829-1040 i you

cannot nd the notice. The contact person listedon the notice or other representative will answer

your questions and attempt to resolve your taxproblem. You also may ask the representatives

manager to review your case. I the matter is stillunresolved, the manager can explain your rights toappeal to the IRS Oce o Appeals.

Levying your wages, or your bankaccount

A levy on your wages, salary, commissions, orother payments or personal services does notneed to be served each time you are paid. Once

we serve a levy, the levy continues until your taxdebt is paid in ull or other arrangements are made

to satisy the debt, or the time period or collectingexpires.

I we place a levy on your bank account, thelevy attaches deposits that have cleared and unds

that are available or withdrawal when the levy isreceived, up to the amount o the levy. The bankmust wait until 21 days ater a levy is received

beore sending the money. The holding periodallows you time to resolve any dispute about

account ownership. Ater 21 days, the bank mustsend the money, plus, i applicable, any interest

earned on that amount.

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Filing a wrongul levy claim

I your property has been levied to collect a tax

or which you are not liable, you may be entitled tothe return o the wrongully levied property by ling

a claim pursuant to Internal Revenue Code (IRC)section 6343(b). Instead o ling a claim with us,you may le a suit or wrongul levy pursuant to

IRC section 7426. See Publication 4528, Makingan Administrative Wrongul Levy Claim under

Internal Revenue Code (IRC) Section 6343(b), ormore inormation.

For example, you may le an administrativewrongul levy claim or a return o your share olevied property i you are a non-liable spouse

and we levy a state income tax reund or a bankaccount belonging to you and your liable spouse.

However, i you are a resident o, or i the propertyis located in, a state with community property laws,

dierent rules will apply that may limit or eliminateyour claim. I you believe that you qualiy, call thenumber on the notice that inorms you that a levy

has occured, or call 1-800-829-1040 i youcannot nd the notice.

Filing a claim or reimbursement whenwe made a mistake in levying youraccount

I you paid bank charges because o amistake we made when we levied your account,you may be entitled to a reimbursement. To be

reimbursed, you must le a claim with us within1 year ater your bank charged you the ee. Use

Form 8546, Claim or Reimbursement o BankCharges Incurred Due to Erroneous Service Levy

or Misplaced Payment Check.Levying your ederal payments throughthe Federal Payment Levy Program

The ollowing is a list o ederal payments youmay receive that we can levy under the Federal

Payment Levy Program in order to pay your taxdebt.

Federal retirement annuity income rom theOce o Personnel Management,

Social Security benets under Title II o theSocial Security Act (OASDI),

Federal contractor/vendor payments, or Federal employee salary and travel payments.

This program electronically levies these ederal

payments rom the Department o the Treasury,Financial Management Service. I we electronically

levy your ederal payments, the levy will take 15%(or the exact amount o taxes owed i less than15%). For deense contractor payments, however,

the levy will take 100% (or the exact amount o

taxes owed). The levy will be continuous until yourtax debt is paid in ull, other arrangements are

made to satisy the debt, or in most instances, thetime period or collecting the tax expires.

I you are already working with an IRSemployee, call that employee or assistance. I you

are not working with an IRS employee and:

you receive ederal contractor/vendorpayments, please call 1-800-829-3903 orassistance, or

you receive any other ederal payment, pleasecall 1-800-829-7650 or assistance.

Releasing a levy

In general, we must release a levy i :

you pay the tax, penalty, and interest you owe, we discover that the time period or collection

ended beore the levy was served,

we levied beore we sent you the two requiredpre-levy notices or beore your time orresponding to them has passed (10 days orthe Notice and Demand or Payment; 30 days

or the Notice o Intent to Levyand the Noticeo Right to Hearing),

the automatic stay during your bankruptcy isin eect,

the levy is on property that we are not allowedto levy,

we levy while the IRS is considering youroer in compromise or installment agreement

request,

we levy while the IRS Oce o Appeals isconsidering your appeal o our rejection o your

oer in compromise or installment agreementrequest,

we levy while you have an accepted periodicpayment oer in compromise or installmentagreement in eect,

we levy while the IRS Oce o Appeals isconsidering your appeal o our termination o

your installment agreement.

we levy while the IRS Oce o Appealsis conducting your timely requested CDPhearing under IRC 6330 or during the United

States Tax Court review o the CDP determination (unless the Court has issued an order

permitting the levy),

We will release a levy i:

we determine that the levy is creating aneconomic hardship or you,

we determine the air market value o theproperty exceeds the liability or which the levywas made, and release o the levy on part o

the property can be made without hindering thecollection o the liability, or

we determine the expense o sellingyour property would be greater than the

Governments interest in the property.

We may also release a levy i we determine

that releasing the levy will help us collect the tax.In general, releasing a levy will help us collect thetax i:

you pay the amount o the Governmentsinterest in the property,

you enter into an escrow arrangement,

you urnish an acceptable bond, you enter into an installment agreement (unless

the agreement says the levy does not have

to be released), or you make some otheracceptable agreement or paying the tax, or

you agree to extend the 10-year period wehave to collect your tax (but you must agreebeore the time period ends).

Returning levied property

I you request the return o levied propertywithin nine months rom the date o the levy, we

may consider returning the property i:

at the time the levy was served, there existedone o the conditions requiring us to release

the levy,

we did not ollow proper procedures, we agree to let you pay in installments, but we

still levy, and the agreement does not say that

we can do so,

returning the property will help you pay yourtaxes, or

returning the property is in both your bestinterest (as determined by the National

Taxpayer Advocate) and the Governments bestinterest.

I we decide to return your property but theproperty has already been sold, we will give you

the amount o the money we received rom thesale.

we levy while we, or the IRS Oce o Appeals,considers your timely request or innocentspouse relie or during the timely requestedreview by the Tax Court.

Selling your property

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Especially or employers

Employment taxes are:

the amount you must withhold rom youremployees or both income and Social

Security/Medicare tax, plus

the amount o Social Security/Medicare

tax you pay on behal o each employee.

I you ignore the Federal tax

deposit and fling require-

ments, the amount you owe can

increase drastically.

I you do not pay your employment taxeson time, or you did not include the required

payment with your return, we will chargeyou interest and penalties on any unpaid

balance. We may charge you penalties oup to 15% o the amount not deposited,depending on how many days late you are.

I you do not pay withheld trust undtaxes, we may take additional collection

action. We may require you to:

le and pay your taxes monthly rather

than quarterly, and/or

open a special bank account or the

withheld amounts.

See Form 8109, Federal Tax DepositCouponand Publication 15, Circular E,

Employers Tax Guide.

I we require you to create a separate

bank account or the employment taxes andyou ail to deposit your taxes in the account,

you may be subject to criminal prosecution.We may charge you criminal penalties such

as a ne up to $100,000.00 and up toone year in jail upon conviction.

See Publication 535, Business

Expenses, or inormation on how to deductinterest paid as a business deduction.

We will give a public notice o a pending sale,usually in local newspapers or by posting fyers in

the local post oce or other public places. We willdeliver the original notice o sale to you or send it

to you by certied mail to your last known address.

Ater giving public notice o the sale, we must

wait at least ten days beore conducting the sale,unless the property is perishable and must be sold

immediately.

Beore the sale, we will compute a minimumbid price and give you notice o our computation.

This bid price is usually 80% or more o theorced sale value o the property, ater subtracting

the value o the property secured by liens senior tothe tax lien.

I you disagree with this price, you may ask thatthe price be computed again by either the IRS or a

private appraiser (at your expense).

You may also ask that we sell the seizedproperty within 60 days ater the levy. For inor

mation about how to do so, call the IRS employeewho made the seizure at the number listed on the

notice that inorms you that the levy has occurred.We will grant your request, unless it is in the

Governments best interest to hold the property ora later sale. We will send you a letter telling you oour decision on your request.

Ater the sale, we rst use the proceeds to paythe expenses o the levy and sale. Then we use

any remaining amount to pay the tax bill.

I the proceeds o the sale are less thanthe total o the tax bill and the expenseso levy and sale, you will still have to pay the

unpaid tax.

I the proceeds o the sale are more thanthe total o the tax bill and the expenses

o the levy and sale, we will notiy you aboutthe surplus money and will tell you how to ask

or a reund. However, i someone, such as amortgagee or other lien holder, makes a claim

that is superior to yours, we will pay that claimbeore we reund any money to you.

Redeeming your real estate

You (or anyone with an interest in the property)

may redeem your real estate within 180 days aterthe sale. You must pay the purchaser the amountpaid or the property, plus interest at 20% annually.

Filing a claim for damages caused byunauthorized collection

I we intentionally, recklessly, or negligentlydisregard the Internal Revenue laws in connection

with the collection o your taxes or, i you arenot the taxpayer in connection with a wrongul

levy, you may be entitled to recover economicdamages. Some limitations may apply. You must

le an administrative claim with the IRS TechnicalServices Advisory Group assigned to your state,

area or county. Mail your written claim to theattention o the Advisory Group Manager at the

address listed in Publication 4235, Technical

Services (Advisory) Group Addresses. I the claimis denied, you can sue the Federal Government,

not IRS employees, to recover economicdamages.

SummonsA summons is an investigatory tool, similar to

a subpoena, that will compel you or a third partyto provide inormation, documents or testimony

that will enable us to determine or collect your taxliability.

Taxpayer SummonsWe may serve a summons on you, as the

person responsible or the tax liability, to:

compel testimony, bring in books and records to prepare a tax

return, or

bring in documents and records to assist us inpreparing a Form 433, Collection InformationStatement.

Third-Party SummonsIn some cases, a third-party summons is

issued. Some examples o who could be issued athird-party summons include:

nancial institutions, third-party record keepers, persons who are not available to cooperate on

an inormal request, or

any person with inormation that may berelevant to your case.

IRC section 7609 authorizes the Service toissue a third-party summons. I you are entitled

to notice:

you will be g iven notice, usually by mail, within3 days ater the the summons is served,

you have the legal right to le a petition toquash the summons or to intervene in a suit toenorce a summons to which the third partyailed to respond,

you may le a petition to quash. I you chooseto le one, you must do so within 20 days ater

notice is given (i notice was given by mail, thepetition to quash must be led within 20 days

ater notice o the summons was mailed), and

the Service will not examine the summoned10


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inormation or take summoned testimony until23 days ater the day notice was given.

You are not, however, entitled to notice o athird-party summons we issue solely to aid in the

collection o an assessed liability or judgment. Iyour liability is assessed and we issue a third-

party summons as part o our eort to collect thatassessed liability, you will not be given notice o

that summons, nor will you be allowed to le a

motion to quash or intervene in a suit to enorcethe summons.

Summons about a Trust Fund RecoveryPenalty

Summonses are requently served to enablethe Service to determine which individuals are

responsible or a trust und recovery penalty.Additional inormation on the trust und recovery

penalty is provided in this publication.

Enorcement o SummonsFailure or neglect to appear beore the Service

ater a summons is issued may result in urtherlegal actions against you. These actions may

include an enorcement suit, a contempt hearing,and a contempt order.

I you are unable to appear beore the Service

on the appointed day and time listed on yoursummons, it is imperative that you contact the

oce/individual issuing the summons. The phonenumber and address will be on the summons.

Collection of Employment Taxes

To encourage prompt payment o withheldemployment taxes and collected excise taxes,

Congress passed a law that provides or theTrust Fund Recovery Penalty. (These taxes are

called Trust Fund taxesbecause the employeractually holds the employees withheld taxes or the

collected excise taxes in trust until the employermakes a ederal tax deposit in the amount o thewithheld or collected taxes.)

I we plan to assess you or the trust undrecovery penalty, we will send you a letter stating

that you are a responsibleperson. You have 10days ater we send our letter to tell us why you

disagree and 60 days ater we send our letter to

appeal our proposed assessment to the IRS Oceo Appeals. I you do not respond to our letter, we

will assess the penalty against you and send you a

Notice and Demand or Payment. We may assess

this penalty against a responsible person whetheror not the company is still in business.

A responsible person is an individual or groupo people (there may be more than one responsible person) who had the duty to perorm and the

power to direct the collection and payment o trustund taxes. A responsible person may be:

an ocer or an employee o a corporation, a member or employee o a partnership, a corporate director or shareholder, a member o a board o directors o a nonprot

organization, or

another person with authority and power todirect the disbursement o unds.

Assessing the Trust Fund RecoveryPenalty

We may assess the penalty against anyone:

who is responsible or collecting and payingwithheld income and employment taxes, or oorr

paying collected excise taxes, and

who willully ails to collect and pay them.Willulness exists i the responsible person:

knew about the unpaid taxes, and used the withheld or collected unds to keep

the business going, allowed available unds tobe paid to other creditors other than the IRS,or otherwise ailed to pay over the taxes to the

IRS.

In addition to these civil penalties and remedies,there are possible criminal ones, as well.

Figuring the Penalty Amount

The amount o the penalty is equal to theunpaid balance o the trust und taxes. The penaltyis computed based on:

the unpaid income taxes that should have beenwithheld, or were withheld but not paid over,plus

the employees portion o the Social Security/Medicare taxes that should have been withheld,or were withheld but not paid over.

For collected excise taxes, the penalty is basedon the unpaid amount o collected excise taxes.

Once we assert the penalty, wemay take collection action againstyour personal assets i you do not

pay the penalty ater being sent

a Notice o Tax Due and Demandor Payment. For instance, wemay le a Notice o Federal TaxLienagainst you, i you are aresponsible person.

Some property cannot be

levied

By law, some property cannot be

levied or seized. We may not levy any oyour property unless we have determined

that we expect there to be net proceedsto apply to the liability. In addition, we

may not levy your property on the day youattend a collection interview in responseto a summons.

Other items we may not levy include:

School books and certain clothing, Fuel, provisions, urniture, and personal

eects or a household totaling

$7,720,*

Books and tools you use in yourtrade, business, or proession, totaling

$3,860,* Unemployment benets, Undelivered mail, Certain annuity and pension benets, Certain service-connected disability

payments,

Workers compensation, Salary, wages, or income included in

a judgment or court-ordered child

support payments, Certain public assistance payments, or A minimum weekly exemption or

wages, salary, and other income.

Use Publication 1494, Tables or

Figuring Amount Exempt rom Levy on

Wages, Salary, and Other Income

Forms 668-W(c) and 668-W(c)(DO), todetermine the amount o earned incomeexempt rom levy.

*These amounts are indexed annually

or infation (these amounts are orcalendar year 2007).

Appealing the Decision

You have the right to appeal a proposedassessment o the Trust Fund Recovery Penalty.

See Publication 5, Your Appeal Rights and How toPrepare a Protest i You Dont Agree.

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Referral to a Private CollectionAgency

To assist IRS in collecting unpaid taxes, the IRS

has entered into contracts with Private CollectionAgencies (PCAs). Your account may be assignedto a PCA or resolution. The PCA has been

authorized by the IRS to assist you in makingull payment o the amount you owe. I you are

unable to pay the outstanding balance in ull, the

PCA may establish an installment agreement oryou within IRS guidelines.

I your account is assigned to a PCA, the IRS

will send you a letter with the PCA contact inormation. The PCA will also send you a letter. I youare contacted by one o these agencies, they will:

assist you in resolving payment o your taxliability on behal o the IRS,

advise you o outstanding tax balances orunled tax returns, and

provide you with assistance or resolution othese issues.

PCAs are not authorized to abate or adjusttax, penalty, or interest owed, enter into Oers in

Compromise, or make other judgment decisionsregarding your account. This includes the lingo ederal tax liens, serving levies, or other actions

described in this publication. However, the IRS stillhas the authority to take these types o actions to

collect an overdue account.

Your privacy will be ully maintained. Conden

tiality requirements and restrictions required by law

will be strictly enorced. To protect your privacy,this means the PCA must veriy your identity by

asking or certain personal inormation beorediscussing your account. I unable to complete this

verication, the PCA may reer your account to theIRS or urther inormation or assistance necessary

to veriy your identity.

Please reer to Publication 4518, What YouCan Expect When the IRS Assigns Your Account to

a Private Collection Agency, or more inormation.I you do not wish to work with your assigned PCA

to settle your overdue account, you must submit

your request to that eect in writing to the PCA.

We offer you a number of free

publications and forms

The IRS orms, notices, and publicationsmentioned in this document give you more

inormation about the various situationsdiscussed. For copies o these documents,

call us at 1-800-TAX-FORM (1-800-829

3676), write to us, visit the IRS oce, orvisit our website at www.irs.gov. Additionally,your local library may have some o thesepublications and orms available.

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US Internal Revenue Service: p594

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Transcript of US Internal Revenue Service: p594