Facts

• Excluding appeals and bankruptcies that temporarily suspend collection actions, the IRS may pursue unpaid tax for 10 years after liability assessment. The IRS notifies the debtor of his obligation before collection actions. Debtors may appeal or dispute the debt by contacting the IRS in writing, in person or by phone. The appeal process suspends collection actions.
  
  

Repayment Plans and Offer in Compromise

• The IRS may delay collections temporarily for hardship cases until your financial situation improves, you negotiate a repayment plan or you initiate an Offer in Compromise. Repayment plans are based on your ability to pay over a 10-year period. An Offer in Compromise reduces the total amount owed when the IRS determines there is doubt that the debt can be collected based on your financial outlook. Reduction may include short-term installments or lump-sum payments. It is the debtor's responsibility to apply for assistance and comply with an IRS investigation to determine eligibility.
  
  

Concerns

• Unpaid taxes may result in bank levies, wage garnishment and property liens. With tax liens, the IRS may seize property and resell it to repay tax debt. Repayment plans or an Offer in Compromise stops levies and liens. Adversely, defaulting on an agreed payment plan may initiate garnishment proceedings. The IRS notifies debtors in advance before taking legal collection actions that affect wages, property and bank accounts.
  
  

Innocent, Equitable and Injured Spouse Relief

• When married couples file jointly, both spouses may be liable for tax debt. However, when only one spouse causes the debt or is at fault, the other may file for Innocent Spouse Relief, Equitable Relief or Injured Spouse claims. With Innocent Spouse Relief, a spouse may be relieved of responsibility if she was unaware of erroneous tax information. Equitable Relief involves unfair underpayments or erroneous tax reporting. Injured Spouse claims involve recouping tax refunds withheld to pay a spouse's past tax, child support or student loan debt.
  
  

Considerations

• Ignoring notifications and tax bills only compounds the problems as late fees and other penalties apply. Contact the IRS if you are unable to pay; they will work with you to find an equitable agreement. Additionally, the IRS Taxpayer Advocate Service and Low-Income Tax Clinic programs provide assistance in resolving tax issues and finding free or low-cost legal representation. For questions about your tax bill and assistance options, call the IRS at 1-800-829-1040.