18 Mar 2025
When the Tax Collector Comes Knocking: IRS Tax Collection
In 2025, navigating the IRS's tax collection process is more critical than ever, as changing tax laws and economic shifts demand vigilance from both individuals and businesses. The IRS, armed with a formidable team of Revenue and Appeals Officers, is tasked with collecting taxes through various methods, from returns to levies. Once a tax liability is assessed—whether due to incomplete payments, substitute returns, or unchallenged Notices of Deficiency—IRS officers spring into action, aiming to collect the owed amounts while adhering to taxpayer protections under the Internal Revenue Code. Ignoring IRS notices can escalate to severe actions like liens, levies, or even jeopardy assessments, where assets can be seized without warning. By staying informed and proactive, taxpayers can effectively manage their obligations, avoid penalties, and maintain financial stability amidst the IRS's rigorous collection efforts.
Related Content
- Statutes of Limitations for Tax Returns and Controversies (Substantial Omissions, Collections, and Certain Governmental Actions)
Recognize how a general three-year period exists for assessing deficiencies and a 10-year period for collecting unpaid taxes, each subject to exceptions. Special periods may apply where the taxpayer has omitted a substantial amount of income from their tax return(s), for lawsuits brought by the IRS, where fraud occurs, and in other circumstances.
- Tax Collection and Enforcement: IRS Third-Party Contacts
See how the IRS has the authority to contact any person other than the taxpayer (i.e., a third party) regarding a taxpayer's tax liability. The IRS may contact a third party to obtain information if the taxpayer is unable or unwilling to provide the necessary information or when the IRS needs to verify information provided by the taxpayer.
Practical Guidance Updates
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- Tax Key Legal Developments Tracker (Federal) (Current)—keep up to date with key legal developments!
- Business Entities. IRS provides various prescribed rates for federal income tax purposes for March 2025 (the current month). Rul. 2025-6.
- Individual Income Taxation. IRS adjusts the housing expense limitation, under section 911, for specific locations for 2025. Under the general limitation, a qualified individual whose entire tax year is within the applicable period is limited to a maximum housing expense exclusion of $39,000 ($130,000 x .30) for 2025, to the extent expenses exceed a base amount of $20,800. Notice 2025-16.
- Tax Practice, Procedure, and Controversy. IRS publishes rates of interest for tax underpayments and overpayments for the calendar quarter beginning April 1, 2025. The rates of interest will remain the same for the second calendar quarter of 2025. Rul. 2025-7.
- International Taxation. President Trump issues a memorandum providing that the OECD Global Tax Deal no longer applies in the United States, with a stated goal of safeguarding sovereignty and competitiveness while combating extraterritorial, discriminatory taxes impacting U.S. businesses. The Organization for Economic Co-operation and Development (OECD) Global Tax Deal (Global Tax Deal); 90 Fed. Reg. 8483 (Jan. 30, 2025).
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