Tax season is over, and the vast majority of taxpayers have filed their returns and paid any outstanding taxes they owed. But for a significant number of people, paying taxes is a hardship that competes with other financial priorities. As a result, it's not uncommon for taxpayers not to be able to pay everything they owe.

Once you fail to pay your taxes in full, the IRS has a process it goes through in order to collect. Unlike most creditors, the tax service has some special tools at its disposal that give it more power to collect on tax debts. Here, we'll walk through the collection process and what to expect if you haven't you're your taxes.

Brick wall with plaque reading Internal Revenue Service.

Image source: Getty Images.

Starting the clock

The first step in the IRS collection process is an initial bill that the tax agency will send to you. On it, you'll see the balance due and a demand for full payment. It will include not only the original tax bill but also any penalties and interest accumulated through a specified date.

If you don't respond to the letter containing the initial tax bill, then the IRS will move on to more dramatic collection actions. Federal tax liens typically apply shortly after the initial demand for payment is made, and sometimes, the IRS will file the federal tax lien in public records to alert other creditors of the unpaid taxes.

The IRS can also take action to seize assets. A notice of levy indicates the tax agency's intent to garnish wages, take money out of bank accounts, or take away a portion of Social Security benefits or retirement income to cover unpaid taxes. Seizure of property such as motor vehicles or real estate can also occur, with the IRS selling the property to raise money to satisfy the debt.

In addition, the IRS has the right to offset any money you'd otherwise be entitled to receive from the tax agency against unpaid taxes. That includes future federal tax refunds, and most states also cooperate with the IRS to allow seizure of state tax refunds as well.

How to keep the IRS happy

To avoid the IRS collection process, there are a number of things you can do. Filing a request to enter into a monthly installment agreement will give you more time to get your taxes paid, and the IRS will typically suspend its collection actions as long as you meet the requirements of the installment agreement.

Ideally, a monthly installment agreement will include provisions that will eventually get your debt paid off in full, However, the IRS also makes partial payment installment agreements or offers in compromise available to those whose tax liability is so large that there's no reasonable way for the taxpayer or the IRS to expect it ever to get paid off.

Finally, if you need more time to pay your tax bill, you can request that the IRS delay its collection activities voluntarily. If you face a financial hardship, then the IRS can determine that the tax debt is uncollectable and defer further action until your financial condition improves. You'll likely need to provide financial information to support this claim, and interest and penalties will continue to accrue. However, taxpayers can generally expect the IRS at least to file notice of a federal tax lien to defend its rights and inform other current and potential creditors of the situation.

Do what you can

It's always best to pay any taxes you owe on time when they're due. Yet for those facing hard times, understanding the IRS collection process and the things you can do to get help will make it easier to get yourself out of a difficult situation with your taxes.