Fair Warning! If you owe the IRS thousands of dollars in back taxes, the first time you’re probably going to hear from this is in letters via certified mail. The first two letters you receive will outline how much you owe, and give you a time frame to pay off the debt or set up a payment plan. If you’ve already gotten a few of these letters, and you chose to ignore them, you’re probably in for a world of trouble.
Tax Levy: Usually, when the IRS places a levy, they do it on your bank account. However, it can happen to any financial account you or your spouse have access to. On the day of the levy, everything will be frozen. You only have 21 days to prove that going without this money will cause great financial hardhsip. This may seem ridiculous, but it’s perfectly legal.
Tax Lien: This is the IRS’ silent killer. When they use this form of collection, it’s usually not immediately effective as a levy. But it can be much, much worse. When the IRS places a lien on your credit, they basically slap a large black spot on it. That means that you aren’t going to be able to do anything involving credit; getting a loan, refinancing a mortgage, etc. A lien can also remove the security clearances and government contracts you have worked hard to obtain.
Wage Garnishment: A wage garnishment is a powerful collection method and pressure tactic. The IRS can legally garnish up to 80% of your paycheck in order to pay your debt. If you are a 1099 contractor, they can even garnish the entire check. If you think it’s hard to make ends meet now, imagine what it would be like if you had no income.
Can Really Do That? Absolutely. The IRS has legal rights to use any of the above collection tactics. And trust me, they’ll use them. The IRS didn’t become the strongest collection agency in the world by playing fair. They fight dirty, and will go to any extent to get their money back. The trick is, knowing how to avoid getting yourself in one of these situations.
What Can I do? The best way to avoid these attacks is to file on time, and contact the IRS about paying off your debt. When it comes to taxes, being proactive is crucial. But if you’re already in one of these collection states, time is of the essence. You need to speak with a reliable, knowledgeable tax professional as soon as possible. A seasoned tax professional will know just what it takes to fight back against the IRS and get your life back on track.
Now you have the Smoking Gun…Use It!
Labels: IRS Wage Garnishment