No matter how much you owe to the IRS, you should know that there are limits and strict guidelines to what the IRS can and cannot do in seeking money owed. In other words: you have rights. To be more specific, you have a Bill of Rights. The Taxpayer Bill of Rights III, or the Internal Revenue Service Restructuring and Reform Act of 1998 was passed following a number of abuses within the IRS and a call for reform.
You can find the entire text here, but it may read like another language if you don’t have a legal background. Here we’ll try to provide you with a condensed breakdown of the act so that you know your rights when it comes to the IRS collection policies:
Small Debts
The IRS does, in many cases, have the right to seize your assets. However, the Taxpayer Bill of Rights states that assets may not be seized in cases where the liability amounts to $5,000 or less. This means that you’re not going to lose your house or car for a few hundred dollars or even a few thousand dollars in income tax that you just couldn’t afford last year.
Additionally, no debt under $50,000 will fall outside of the definition of a “small tax case,” so the IRS cannot treat you like a major tax case.
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act was passed in relation to the credit crisis and bill collectors overstepping certain boundaries in seeking payment. According to the Taxpayer Bill of Rights, the IRS must follow many of the provisions found in the Fair Debt act, as well. These include:
A Note on he Privatization of Tax Collection
Know that, even though you do have rights in place, the IRS does not always collect taxes directly, and you may have to deal with a private company’s definition of some of these policies. For instance, some mortgage lenders collect property taxes, and the IRS may use privately owned collection agencies to seek money owed.
These companies, however, are held to the same standards as the IRS in regards to the Fair Debt Collection Practices Act, so if you feel that you are being harassed or treated in an unprofessional manner, you have options for recourse whether it is the IRS or a collection agency that is mistreating you.
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