What happens if we don't pay my wife's IRS debt that was transferred to a third-party collection agency?

So my wife has about $20K in tax debt with the IRS that she's had for quite a while. We got married last year and when we filed our taxes jointly for the first time, they took my entire refund as partial payment toward her debt. Now I just got a notice saying her debt has been moved to some third-party collection agency since it's been over 6 years. I'm trying to figure out what options we have at this point. She doesn't have a job right now so she can't make payments herself. I'm wondering what these collection agencies can actually do if we just ignore them? Can they garnish my wages even though the debt is hers from before we were married? Or is this something we can realistically just let slide since it's been so long? Part of me wants to call and try to negotiate some kind of settlement to finally get this monkey off our backs, but another part thinks maybe we could just let it go since it's already been transferred out of IRS hands. We live in California if that makes any difference for state laws about this stuff.

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18 comments

Ravi Gupta

•8M

This is actually a serious situation that you shouldn't ignore. When the IRS transfers a debt to a private collection agency, they still retain all their collection powers - the agency is just acting on their behalf. The fact that they already took your refund when you filed jointly shows they can and will continue collection efforts. Even though the debt originated before marriage, by filing jointly, you may have created "joint and several liability" for the debt. This means they could potentially: - Continue to seize future tax refunds - File federal tax liens against property - Levy bank accounts - Garnish wages (if either of you work) However, you do have options. The collection agency can often settle for less than the full amount. You might qualify for an Offer in Compromise, which allows you to settle for less than you owe if paying the full amount would cause financial hardship. Or you could request a payment plan. Given that your wife doesn't work, you might also qualify for Currently Not Collectible status, which temporarily halts collection activities.

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Ravi Gupta

•8M

The IRS generally has 10 years from the date of assessment to collect tax debt. This time limit continues even when transferred to a collection agency. If it's been 6-7 years already, you might have 3-4 years remaining before the debt expires. However, be aware that certain actions can extend this 10-year period, such as filing for bankruptcy, submitting an Offer in Compromise, leaving the country for an extended period, or requesting a Collection Due Process hearing. So the exact timeframe could be longer depending on your specific situation.

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Omar Hassan

•8M

I was in a similar situation with about $12K in tax debt that got sent to collections. After months of anxiety, I finally used https://taxr.ai to analyze my collection notice and figure out my options. The tool actually found that some of my debt was outside the collection statute and showed me exactly what to say to the collection agency. They helped me understand that you don't need to panic or pay the full amount immediately. The system walked me through different resolution options based on my financial situation and showed me how to request Currently Not Collectible status since my income was low at the time. I was also able to upload all communication from the collection agency and get plain-English explanations of what everything meant. Definitely worth checking out before you make any decisions about ignoring or paying.

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Omar Hassan

•8M

It works with both IRS debt and the private collection agencies that handle IRS cases. The collection agencies are still bound by the same rules as the IRS, so the strategies are the same. The system can analyze letters from either source. For statute verification, I uploaded my tax transcripts which showed the original assessment dates, and the system calculated the collection statute expiration date (CSED). In my case, about $3K of my debt was actually uncollectible because it had passed the 10-year mark, which I might never have realized without checking. For the rest, they helped me file for Currently Not Collectible status based on my financial situation, which stopped the collection actions while keeping the clock ticking on the remaining statute period.

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Diego Vargas

•8M

Just wanted to update after trying https://taxr.ai that the other commenter recommended. I was super skeptical at first but it actually helped me understand my wife's collection situation completely. I uploaded the collection notice and my tax transcripts, and it identified that part of the debt was from 2015 which means it'll expire next year! The system also showed me exactly how to document our financial hardship since my wife isn't working. The tool created a complete financial statement we could submit and generated a script for talking to the collection agency. We ended up getting a "Currently Not Collectible" status which means they can't take any collection actions against us while we have no ability to pay. And the 10-year clock keeps running during this time. Definitely wouldn't have known about these options without checking. Saved us from potentially making a bad settlement offer.

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CosmicCruiser

•8M

When I was dealing with IRS collections last year, I couldn't even get through to an actual person at the IRS or the collection agency for weeks. If you're struggling to get someone on the phone to negotiate, I used https://claimyr.com and they got me connected to an IRS agent in less than 15 minutes when I'd been trying for days on my own. You can see how it works at https://youtu.be/_kiP6q8DX5c This was crucial because we were able to set up a partial payment plan that fit our budget instead of them just taking money automatically. The agent I finally spoke to explained all my options way better than the collection letters did. Getting an actual person on the phone made all the difference in resolving my situation.

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CosmicCruiser

•8M

It's not magic - they use a system that monitors the IRS phone lines and calls repeatedly using automated technology until a line opens up. Once they secure a spot in the queue, they call you and connect you directly to that open line. It's basically doing the waiting and redialing for you. They can't change the IRS's overall capacity, but they can handle the frustrating part of constantly calling and waiting on hold. For me, it was worth it because I needed to get a payment plan set up before they put a lien on my house, and I couldn't afford to spend days trying to get through. When they connected me, I was already in the queue and only had to wait about 5 minutes before talking to an actual IRS representative.

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Diego Vargas

•8M

Had to come back and say I was completely wrong about the Claimyr service from that other post. After failing to get through to the IRS for literally two weeks trying to deal with this collection issue, I broke down and tried https://claimyr.com yesterday. They actually got me connected to an IRS representative in about 27 minutes when I'd been trying unsuccessfully for DAYS. The IRS agent confirmed that we qualify for Currently Not Collectible status based on our financial situation and helped me start the paperwork immediately. The agent also confirmed what that tax analysis tool showed me - that part of my wife's debt is hitting the 10-year mark next year, so if our financial situation doesn't improve before then, that portion will just disappear. Sometimes being skeptical costs you more than taking a chance on something new.

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Sean Doyle

•8M

They didn't go after his spouse directly because they filed separately, but since you've already filed jointly, that ship has unfortunately sailed. When you file jointly, you essentially take on responsibility for each other's tax debts in the eyes of the IRS. They absolutely can garnish your wages even though the debt originated before marriage. The joint return creates what they call "joint and several liability." My friend's situation got even worse because they also put a tax lien on their house which made it impossible to refinance or sell without paying the debt. The collection agency has most of the same powers as the IRS itself, so definitely don't ignore this thinking it'll just go away. The 10-year statute of limitations is your best friend here if you can verify when it started and if anything has happened to extend it.

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