Why is the tax debt process so complicated? But don’t be afraid!
In addition to the confusion created by the IRS, which you will read more about later, there are other tax collection efforts that need to be considered as well. These include liens, levies, wage garnishment, and other collection options the IRS has for getting your money back.
In some cases, people may have liens or levies placed on their properties to collect the unpaid taxes. These are filed against the property’s title. But, a lien doesn’t necessarily mean that the IRS won’t ever attempt to collect the money. They may pursue a wage garnishment in order to collect a tax debt owed.
Wage garnishment means that the IRS can seize a portion of your paychecks or bank account from your employer. For example, if you’re making $30,000 per year, and you have $5,000 owed in back taxes, the IRS can freeze your account for up to 20 weeks. They then will pay out the $5,000 to the IRS on a weekly basis.
If you still owe money, they may levy on your bank account, which means they will seize all of the money that is in it and send the amount due to the IRS.
But, not everyone who has an unpaid tax debt will see the enforcement process unfold like this. Some people will have to work out a repayment plan with the IRS. This can include a payment plan that may include one-time payments, installment payments, and extended payment terms.
In all cases, people who owe back taxes to the IRS have to act quickly and get in contact with an IRS professional to handle their debt. As an example, it would not make sense to wait until after the IRS closes your account to file a lien or wage garnishment. You want to get your taxes paid as quickly as possible, and it will help to get an initial payment plan in place before the IRS begins collection efforts.
3 Simple Tax Tips for People Who Have an IRS Tax Debt
While dealing with an IRS tax problem can be overwhelming, we want to share three simple tips that may help you overcome your tax debt and get your life back on track. The first tip is to contact a professional that can help you get started. Find a tax attorney in Philadelphia who can help you go through the IRS process for an overdue tax debt. If the unpaid tax bill is very large, we may be able to recommend another option like filing an IRS tax appeal.
The second tip is to make your payments on time. The IRS is most likely going to hold back funds from your account as a collection account while your tax debt is being resolved. If you are filing a lien or wage garnishment, you may not be able to make your regular payments to your tax attorney. To help you deal with the IRS, we recommend being 100% compliant with your tax bill. You should always aim to be an early and prompt payer, even when we send you the bill for the first time.
A third tip is to reach out to the IRS to find out what their enforcement strategy is. They may be willing to work with you on a payment plan that will keep your account open, but keep you in compliance. For some people, we will be able to file an offer in compromise. This is a negotiation between the IRS and our client that will result in the IRS taking your tax debt in a less strict enforcement strategy. This is an effective strategy if you’re not required to pay taxes until the due date on your payment plan. However, if you’ve missed a payment, this is not a good strategy.
When you file for bankruptcy, the IRS may be able to remove some of your debt, and we can discuss a payment plan that will lower your tax debt while we proceed with your bankruptcy. Don’t let the IRS put you behind in your payments while you go through bankruptcy. In some cases, you may qualify to skip paying taxes during the bankruptcy process.
In case you are struggling with the collection process of an IRS debt, call (888)489-4889 for tax resolution officer for a free consultation.