If you have an existing IRS problem, such as an unpaid tax debt, it's perfectly appropriate to harbor a sense of anxiety. Arguably the world's most powerful collection agency, the IRS has earned a reputation for bold tactics and relentless tenacity when tax liabilities go unpaid. The full force of their efforts can rip the ground from beneath your feet or, at least, the money from your pockets.
Resolving a tax issue is possible at virtually any stage of IRS collections, but time is of the essence. And addressing your tax problem in a definitive fashion will be preferable to awaiting the next round of IRS collections. Consider some of the more abrasive actions you face and how best to counter.
Delinquent tax bills can ultimately be met with aggressive collection methods, including garnishment of your wages. This entails your employer receiving instruction to withhold a percentage of your wages to be applied to your debt. Such a garnishment can put an obvious strain on your standard of living, not to mention heap embarrassment onto your relationship with supervisors. Wage garnishments are not a permanent collection measure, provided you take steps to resolve your debt. This may include obtaining an installment agreement, allowing you to pay your debt back as a monthly bill spread over several years. You may find the terms of such an arrangement less objectionable than having each of your paychecks stripped.
Your bank accounts, much like your wages, are vulnerable to collection action in the event a tax debt goes unaddressed. A bank levy can affect your checking or savings account, as well as any bank account on which your name appears (this includes spouses and relatives). Once your funds have been frozen, they are held for a period of twenty-one days before being permanently seized. This three-week window is designed for you to attend to your tax concern, enabling you to reach an alternate resolution that may result in a wage levy release.
If a tax debt is neglected for long enough, the IRS can eventually seize your property and assets. This may include your home, vehicles, and valuables – whatever may be used to satisfy your balance. Seizures, like bank levies, are time sensitive. And remember, if the IRS reaches the point that they're taking your property over a tax debt, they will be less than flexible when you request a reprieve.
Regardless of the action you're facing, a formal resolution is perhaps the only proven method for appeasing the IRS. This may involve a payment agreement or perhaps a settlement offer, depending on your circumstances. In some cases, you may be able to prove than any collection action would present you with a financial hardship; this status, known as Currently Not Collectible, suspends collection activity until your financial situation improves.
Any formal resolution may be best handled with the assistance of a licensed tax professional. The consultation for this type of service is at no cost to you and can help you to make an informed decision on how to proceed. If you end up enlisting a tax professional to help, you can be assured that the resolution will be handled within the letter of the law and in a way that's optimal for your finances.