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If you default on an installment agreement for repayment of an IRS tax debt, the tax-collecting agency can take several actions to collect the debt.
The IRS may send you a Notice of Federal Tax Lien and/or an IRS levy action, both of which can have a negative effect on your credit standing and result in other financial problems. A tax lien is a legal claim against your property, while a levy is where the IRS actually seizes your property in order to satisfy your past-due taxes.
Failing to make monthly payments in keeping with an installment agreement is the most common reason why taxpayers are found in default. If you are unable to make payments under an IRS installment agreement, you should contact the agency as soon as possible. You may be able to restructure the agreement and avoid defaulting on the agreement, which can have serious financial implications.
Generally, the IRS encourages installment agreements over other forms of enforcement, so tax officers may be willing to work with you even if you have defaulted.
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified tax litigation lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local tax litigation attorney to discuss your specific legal situation.