As a prerequisite to collection, the IRS must assess the tax. IRC §6202. An assessment is the recording of a tax liability into the IRS system on Form 23-C (Assessment Certificate). IRC §6203. The information recorded includes the taxpayer's name, social security number, year in question and the amount and type of tax involved. The date on which Form 23-C is signed is called the assessment date. This date is important because it triggers two statutes of limitations: (1) notification of the taxpayer and (2) collection of the tax. The IRS must notify the taxpayer of the assessment within 60 days from the date of assessment. Also, the IRS has 10 years from the assessment date to collect the tax. IRC §6502(a)(1).
The IRS must next send a Notice and Demand to the taxpayer. The IRS will send the first notice and demand for payment no later than 60 days after the date of assessment. If the taxpayer does not respond to the first notice, then the IRS is likely to send up to three more notices before commencing collection activity. IRC §6303.
If tax is not paid after assessment and notice and demand, a lien in favor of the IRS automatically occurs. § 6321. This is sometimes referred to as a "secret" lien. If the IRS then wants to file a lien that is recorded in a court house, it must follow the procedures of § 6320 and § 6330. These notices will include information on requesting a collection due process hearing. See the section on Collection Due Process for more information.
After the initial notice of tax due, there are generally a series of four notices: Reminder Balance Due (CP-501), Important 2nd Notice Balance Due (CP-503), Urgent Final Notice Balance Due (CP-504), and Final Notice of Intent to Levy and Notice of Your Right to a Hearing (CP-90). This last one is that one that explains that certain rights under section 6330 attach before the actual levy action is begun.
If the taxpayer fails to respond to these notices, the IRS may then levy property. To satisfy a tax liability, the IRS may levy property, seize and sell the property, file a tax lien, take withholdings and garnish wages and other payments. Some taxpayers do not come to the Clinic until the IRS has engaged in these actions.
Documents on IRS.gov
|IRC §6202||Mode or Time of Assessment|
|IRC §6203||Method of Assessment|
|IRC §6303||Notice and Demand for Tax|
|IRC §6330||Notice and opportunity for hearing before levy|
|IRC §6320||Notice and opportunity for hearing upon filing of notice of lien|
|TD 2002FED ¶ 47,017||Treasury Decision 8979, (Jan. 17, 2002)|