Many people take their tax obligations for granted. But unfortunately, when someone owes a substantial amount of back taxes, the Internal Revenue Service (IRS) will take action and seize their assets or even dock their salary to pay it back.
There are several types of IRS-imposed seizures, including bank account levies and wage garnishments. You may have an unpaid tax liability or have had a previous compromise made with the federal government in exchange for partial payment.
Let’s explore the consequences of not paying your taxes for years.
IRS Tax Lien
What happens if you do not pay your taxes? The Internal Revenue Service can place a tax lien on you and your most significant assets, like a home or a business. A tax lien has two parts: the tax lien itself and the notice of the tax lien.
The Notice of Federal Tax Lien is a legal document used to notify third parties (like mortgage companies, banks, and credit card companies) that you owe back taxes to the IRS. If you file for bankruptcy and the IRS has filed a Notice of Federal Tax Lien against you, the IRS must file a Proof of Claim with the Chapter 7 bankruptcy court.
Here are some of the consequences of receiving an IRS tax lien:
- The IRS can seize property or assets that you own to help pay the debt. This even includes your home, if a tax lien has been filed against you.
- The IRS can withhold part of your wages to help pay the debt.
- The IRS can withdraw funds from your bank account to help pay the debt. This is also known as a bank levy.
- The IRS can sue you individually for the entire amount of the debt.
If you haven’t paid your taxes for a long time, the IRS may be able to seize your assets, including:
- bank accounts
- real estate
- safety deposit boxes
- stocks and bonds
- retirement accounts
- cars, boats, and other motor vehicles
- personal property
Collecting Tax Debt
The IRS can also collect your tax debts through the court system. Tax collectors at the local, state, and federal levels use different methods to collect your unpaid tax debt.
The IRS can collect your unpaid tax debt through your federal tax refunds. If you have one coming to you from the IRS and you owe back taxes, the IRS will just take it as payment.
IRS Tax Levy
If you have failed to pay your taxes and an IRS tax levy is made against your property or assets, this means the IRS has the right to seize your assets to help pay your unpaid debt.
An IRS tax levy is a legal seizure of some or all of your assets. This happens if the IRS is owed at least $50,000 in taxes, penalties, interest, or other amounts that you owe.
Fix Your Taxes Today
There’s a common misconception that the IRS won’t come after you if you don’t pay your taxes for several years. While paying taxes on time is the best course of action, we know that life happens sometimes, and things may get in the way. There are steps that you can take to pay your unpaid tax liability before it gets worse. Plus, it may be beneficial to speak with a tax attorney or accountant about all of your options.
Get help for IRS debt relief at Axiom Tax Resolution Group. We have trusted tax professionals who can help you find a permanent solution to your tax problems. Contact us today!