Tax Debt and IRS Collection Actions

Last updated on October 8, 2022

The IRS uses many kinds of collection actions to get taxpayers to resolve their tax debt. Some of the methods to collect back taxes include the sending of notices, federal tax lien, and tax levy. The IRS begins by sending notices to collect back taxes and ultimately places lien and levy to fulfil tax debt if the taxpayer does not resolve the case.

IRS notices inform taxpayers about the tax debt amount to be paid. The IRS also provides guidance on how to pay the tax debt. Usually, the IRS stresses on full payment of the tax debt in a single payment. If taxpayers ignore the notices, the IRS moves to lien.

A lien is a collection action in which the IRS seizes the property and/or assets of taxpayers under tax debt to ensure payment of back taxes. The placement of a lien damages the taxpayers’ ability to take credit in future. If after the placement of a lien, tax debt stays unresolved, the IRS moves to levy.

A levy is the most aggressive collection action by the IRS. Under it, the IRS sells the seized property and/or assets of taxpayers to fulfil the tax debt. Before placing a levy, the IRS sends the final notice CP 90 – Final Notice of Intent to Levy and Notice of Your Right to a Hearing. Taxpayers must resolve the matter within 30 days to prevent the IRS from selling the seized items.