Putting it off: So you received that notice from the IRS in the mail a few weeks ago? No big deal, right? Wrong! Because the next notice you get from the IRS is not going to be a pleasant one. After you receive your initial notice of your debt, if you do not contact the IRS within the allotted time, drastic measures will be taken. A "Final Notice" will be issued, and you will have ten days to either pay off the debt in full or arrange a payment plan. If you do not, here's what will happen:
Wage Garnishment: Imagine your paycheck is $1,000 dollars per week. Well, guess what? Because of your delinquent debt to the IRS, it's now $250 dollars per week. You heard right, the IRS can leave you with far less than you are used to receiving. That could make the difference between you getting a weekly paycheck, and a weakly paycheck. Depending on your filing status and number of allowable exemptions, you could bring home no more than $791 a MONTH. And, it won't matter how much overtime you work... because the IRS doesn't take out a percentage of your check. They simply decide how much you would need for basic survival.
Bank Account Levy: This is as scary as it sounds. If payment arrangements are not made and the debt continues to grow, the IRS will place a levy on your bank account. This means that all of your financial assets in that account that day will be taken out! The bank has to set aside that money for 21 days and send it along to the IRS, if you can't absolutely prove that you need it to prevent something like an eviction or a power outage. Picture having to fill up your tank when you're taking the kids to school one morning and having your debit card declined. Even worse, the bank has no more say than you do in the matter: your account will belong to the IRS.
Liens: A lien is when the IRS claims your personal assets as collateral: your car, boat, or even your house. Everything you own and will own now belongs to the IRS. Initially, they will hold title on the property until the debt is paid. Eventually, they will fully claim the assets and auction them off to make your payment on your debt.
S.O.S. The best way to avoid these measures is to be proactive. Stay on top of your debt, before you wind up under it. When you get that first notice, that's your red flag that you need to do something about your tax issue. There are many ways of going about resolving your issue, and it's important that you find out which one is best for you and that you take action.
Am I too late? It's never too late for you to take action against your tax issue. Whether you're $10,000 or $1,000,000 dollars in the hole, none of these options above sound good. No one wants to wake up and worry about getting half a paycheck, not being able to feed your children, or not being able to sell your own house! Wherever you stand, put up your dukes and fight back against your issue!
Now you have the smoking gun... Use it!
Labels: Back Taxes, IRS Notices