Q: What is the primary purpose of an IRS collection letter?

A: The primary purpose is intimidation and extortion. The letters use threatening language (e.g., "seizing assets or wages") to scare citizens into paying their balances. They are essentially automated, computer-generated notices meant to prompt an immediate reaction from you to have you pay the IRS as much as possible, as soon as possible.
 

Q: Is there a specific IRS agent assigned to watch my account and send these letters?

A: Generally No. Very rarely is an in9ividual agent sitting at a desk monitoring your specific case to see if you reply. The letters are generated by a computer system, often indicated by a barcode at the bottom or top of the IRS letters. These letters are sent out in bulk with the name and signature of no human being because no human being is actually watching you or your case.

Q: If I owe the IRS money, Does it matter if I've only received two letters in three years, or if I move to another country?
A: No, these factors are entirely irrelevant. The frequency of the letters does not indicate whether a levy is imminent or not. Because the system is automated, enforcement action could theoretically happen tomorrow, or it could never happen. Moving abroad also does not change the status of the debt or the automated nature of the collection system.
IRS cannot take your money without sending you by certified mail letter that gives you the opportunity to ask for a Collection Due Process Hearing, which gives you the opportunity to challenge the collection with the right to appeal IRS collection to the U.S. Tax Court and the Federal Court of Appeal. Over 90% of the time, IRS will never send you a tax collection due process letter and the tax after 10 years will automatically expire. You owe zero.

Strategic Considerations & Best Practices

Q: Why might it be a bad idea to set up a payment plan using a personal bank check?

A: Writing a personal check hands the IRS your exact bank account and routing numbers. By doing so, you are telling them exactly where your money is stored, making it incredibly easy for them to issue a bank levy down the road if they choose to.

Q: What is the alternative to using a personal check for a payment plan?

A: Use a non-bank postal or commercial money order. These money orders are relatively anonymous regarding the source of the funds. They allow you to make the payment with less risk of exposing your actual banking institution to the IRS which could levy your bank account. IT gives you control over how much and when you want to pay the IRS and avoids negative surprises.

Q: If I choose not to pay, how should I protect my money?
A: You must remain highly vigilant about your bank balances. If you owe a large amount (e.g., $45,000) and you leave $50,000 sitting in a bank account, the IRS could theoretically seize it all at once if a levy is triggered. You may wish to keep bank balances to a minimum to ensure there is nothing substantial for them to take and you can pay the I RS on better times and terms that will not break you.

Q: Can a tax advisor legally tell me to just ignore the debt and not pay?
A: No. Advising someone to explicitly not pay a self-reported tax debt (a filed Form 1040) could be construed as conspiracy to evade taxes. An advisor can outline the realities, the options, and the current state of IRS enforcement, but the final decision to pay or not pay always rests entirely on the individual's shoulders.

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