Collection Statute Expiration Date

What is SFR?

If you file a tax return and do not pay your balance at the time of filing, you will receive a notice for the amount that is due. This is also true when you don’t file a tax return. The IRS will perform what’s called a Substitute for Return (SFR). This means they will file a tax return for you to determine the amount that is owed. Hence the name, Substitute for Return, meaning they will substitute what should have been an original return filed by you. The SFR filing will not take into consideration deductions, credits or any different filing status other than single. You will be taxed at the highest rate. An SFR will in most cases result in a balance due.
IRS Collections

The moment a balance is determined, a notice will be generated. Once the first notice of a balance due is sent, the IRS Collection process begins. These collection actions will continue until your account is paid in full or until the 10-year time period that they can legally collect the tax debt expires. An expiration date is determined for each year that a balance is due. This is known as a Collection Statute Expiration Date, or CSED.

IRS Collections
Penalties & Interest

What Are You Able to Pay?

The amount you owe to the IRS will also include any penalties and interest that have been added to the account. The unpaid balance is qualified to have interest added daily. On top of the interest you will also accrue penalty amounts at a monthly rate. The most common penalty you will see is the late payment penalty. Both the interest and penalty amounts continue to accrue in addition to the total tax. This will not stop until the entire amount is paid in full. It would be smart for you to try and pay off the balances as soon as possible. This will help minimize the additional amounts of interest and penalty that will be added. Ways to pay the tax liability off sooner could include obtaining a bank loan, opening a credit card, or pulling money out of the equity in an asset you own.

The interest rates and fees from a bank will be lower than those charged by the IRS. You are also encouraged to make voluntary payments. Payments can be made online or by mailing in a check or money order to the address listed on your tax bill. All payments must be made out to the Department of the Treasury. Be sure to include your social security number, the Form 1040 (individual income tax) and the years that a balance is present. The Form number may vary depending on the type of tax that is due. Sending payments that are affordable to you at the time can show the IRS that you are at least attempting to become compliant. Voluntary payments will not always keep your account safe from collections, but it will show that you are doing what you can and not willfully neglecting the fact that a tax liability is present.

Installment Agreement

What Are Forms 9465, and Form 433-D And How Do They Affect Me?

If you are unable to make a tax payment in full, don’t get worried. There are numerous other types of payment options that can be placed on your account. Deciding to pay the balance through a payment plan will halt further collection actions from taking place. The most common type of resolution is an Installment Agreement. You can fill out and submit a Form 9465, Installment Agreement Request with your tax bill. You may also obtain an Installment Agreement by calling the IRS at the number that was given in the notice. Each Installment Agreement has a one time user-fee that is charged for starting the agreement. This fee can vary based on the type of agreement that is set up.
IRS Collections

You can establish the agreement online for roughly around $10.00. If you call in to set up the Installment Agreement, the user fee will be $225.00. You also have the option to submit a Form 433-D, direct debit. This form allows the IRS to take payments right from your bank account. A direct debit one-time user fee will be $107.00. In the case where the IRS deems you as a low-income taxpayer, your user fee will be reduced to $43.00. If you are a low-income taxpayer and choose to submit a direct debit form, then in most cases your fee will be waived entirely.

Collection Information

In order to achieve the best outcome, you will have to fill out and submit a Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. This form can be sent along with your Installment Agreement Request. A Collection Information Statement Form will provide the IRS with all your asset and income info to decide your ability to pay. This form requests a lot of detailed info. A more basic version of submitting your financial info can be done so on a Form 433-F, Financial Statement.

IRS Collections

What Is Collection Status?

All the financial info will be reported just in a less invasive way. By presenting financials to the IRS, you are proving to them what you can afford to pay. At Times, the IRS will ask you to set up a streamlined Installment Agreement without financials. However, the monthly payments are usually high. The reason they are high is so that the IRS can ensure that the total balance due will be paid before the Collection Statute Expiration Dates. If you can show through financials that you simply cannot afford to pay the taxes back, then the IRS will place your account into a status called Currently Non-Collectible.

This does not mean that your debt goes away. You are still at fault for the full amount of liability that is on your account. A currently Non-Collectible status simply means that through the submission of financials you cannot pay. The IRS will delay collection action on your account until your financial condition improves. The IRS will do a review of your account every two years when placed into currently non collectible. You may or may not need to provide updated documents when this review happens. Updated information is vital to show that you remain in a financial hardship and are unable to afford a payment. If the IRS can see that your financial status has improved, then they will request a payment from you.

Did You Receive A Notice?

If you receive a notice and do not contact the IRS, they will take action to collect the unpaid balance. A Notice of Federal Tax Lien will be issued when your account has gone unresolved. A federal tax lien can be placed on your assets, such as your home. A lien is placed to secure the interest of the IRS. The IRS is looking to obtain funds through any sources that you may have existing. Once a lien has been filed, the IRS can also follow that action with issuing a levy. A levy can be issued against your bank account, social security income, wages, or account receivables connected to your self-employment income.
IRS Collections

Do not wait for the collection actions to get this far before searching options to resolve your account. Do your due diligence in hiring a competent firm, like Omni Tax Help, to assist you in resolving your tax problems. A team of trained experts can help review your financial info and decide the best resolution for you. Having a team of professionals on your side can also give you the confidence to know that you will not be taken advantage of. As the taxpayer do have rights. Before negotiating with the IRS it is best to know them.