Before levying or tax liens are placed against individuals and businesses, the IRS issues an assessment letter which gives you an opportunity to agree or disagree with its findings.
Failure to file or pay taxes by their due dates results in penalties that can escalate into wage garnishment and asset seizures, and should be dealt with swiftly by filing missed returns and finding ways to settle outstanding balances.
1. Penalties
Falling behind on your taxes can be terrifying, with the IRS having the power to seize assets like bank accounts and wages from you if they become delinquent. That is why it’s imperative that tax issues are taken care of as soon as possible to avoid serious repercussions from occurring later.
The IRS begins their collection process by sending you a notice outlining your total back taxes owed and an expected due date for payment. Depending on your circumstances, penalties and interest may also be included (https://www.usa.gov/file-taxes) typically at first this penalty amounts to 1% of what’s owed; after two years it increases up to 25%.
Not only are federal theft laws in effect, but each state also has their own version of theft crimes that may differ significantly from one another. Some consider embezzlement a felony while in others it only qualifies as a misdemeanor offense. No matter which state it occurs in, an embezzlement conviction can have serious repercussions for your reputation and can inhibit job searches, professional license maintenance and educational pursuits.
Judges determine the severity of theft crimes, but there are ways you can reduce risk. For instance, if you can demonstrate how dire your financial situation is, they can offer an installment agreement suited specifically to your circumstances. To apply for this, a set-up fee will vary based on how payments will be made; if more than one monthly payment goes unmade, your agreement with the IRS may be terminated and they’ll consider you in default of their tax debt.
Apply for a streamlined installment agreement either online or over the phone with the IRS, with April 15th serving as the deadline (unless it falls on a weekend or holiday in which case it will be extended by up to three days). Depending on your individual circumstances, the IRS may also forgive some or all of your debt through Fresh Start initiative and Offer in Compromise programs; both processes may take more time than expected, however.
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2. Tax Liens
Tax liens are security interests attached to real and personal property when the owner fails to pay his or her taxes on time, taking priority over other debts such as mortgages or loans. Liens can be an unpleasant surprise when trying to sell property or obtain financing. Some states, including Georgia, will issue state tax liens against delinquent property tax payers as soon as they become delinquent – they will auction any unpaid properties via redeemable deeds. Eventually the IRS may place notices of tax liens or take other collection actions before placing their lien but once their collection actions begin, regardless of any payment plan agreements or offers in compromise entered into with Georgia authorities.
Tax liens may also be placed against other assets, including vehicles and boats. Once registered with public records, any amount owing becomes difficult to sell or borrow against. While you can petition to have the lien lifted later on, taking immediate steps to resolve it now could help avoid more substantial repercussions than necessary in terms of being unable to pay the debt owed is key for its removal and avoid incurring more liabilities than necessary.
If you owe unpaid taxes, the IRS will send notices that may start off friendly but soon become increasingly hostile. Finally, an intent to levy will be issued which means enforcement actions could include garnishing wages and seizing assets if collection efforts don’t work. Don’t ignore them: these notices come often enough from them!
If you have received collection notices or have an outstanding tax debt, consulting an attorney is essential to finding ways to resolve it and avoid tax liens. In certain instances, they can even withdraw federal tax liens completely, thus eliminating them from your credit report completely – the Peck Group offers this service for Georgia tax liens as well, so that life can resume normally without worrying about IRS demands or filings.
3. Collection Action
As soon as you fail to respond to multiple notices of unpaid taxes, the IRS takes more aggressive action towards collecting them – often resorting to tax liens and wage garnishment or bank account seizure as collections tools.
If you cannot pay what is owed, the IRS may provide an online payment plan option that suits your circumstances. The terms will determine how much is due each month and may include a set-up fee; this option could stop collection action while an agreement is in place, but you can contact the professionals to walk you through such a complicated process. Look below for more information:
However, this status is only temporary: If you fail to make monthly payments as agreed, collection action could resume and an agreement could end prematurely. Alternatively, there may be programs such as Fresh Start Initiative or Offer in Compromise which allow you to settle with the IRS at a reduced amount than what they owe you; these processes may take considerable time and effort before any results emerge.
Debt collection agencies are licensed by creditors to collect regulated debts for them, adhering to the Fair Debt Collection Practices Act which places restrictions on how they can collect them – this includes not discussing your debt with family, friends or neighbors as well as using abusive language such as profanities and threats. It also prevents them from calling between 8am-9pm without prior consent of both parties involved.
FDCPA stipulates that before beginning collection proceedings, an agency must verify that the debt is legitimate. If you don’t believe the debt is yours or the amount incorrect, send a written dispute letter directly to the collector; this gives them 30 days to validate or end collection proceedings.
If the debt is undisputed, creditors may file a lawsuit to collect on it. You must respond within the deadline specified in your summons and complaint; seek assistance if you don’t understand any court documents issued against you.
