Believe it or not, its a mere 12 Days until Christmas. I've decided to finish off the Christmas season with a few Christmas related Tax Posts. Hopefully it will help you have a happy holiday season- even if you owe the IRS.
Your Questions: I've been receiving a few e-mail from people asking me if it's OKAY to ignore their Installment Agreement payments to the IRS just for the month of December. They ask if their bank accounts will be safe if they gift deposits of large sums of money into their bank accounts when they owe the IRS.
The Answer: Absolutely not, the IRS is a Grinch, and they don't care if it's Christmas, they will Levy your Bank Account.
A Review: Just so you remember what we're dealing with, here's a review of what awaits you if you refuse to pay the IRS this Christmas season.
Bank Levy: With a Bank Levy, the IRS can seize all the funds from your Bank Account. Think about it, you try to skip out on your $400 payment then all of the sudden, $4,000 from your Bank Account is gone for good? The IRS will send as "Notice of Intend to Levy" notice to you as a warning, but after that, when they seize the funds from your account is randomized. They want to catch you by surprise.
Wage Garnishment: Your paychecks and even your Christmas Bonus isn't safe if you don't pay the IRS on time. The IRS will begin to levy a set amount from your paychecks if you refuse to continue making IRS payments. They can continue to seize your funds until the Tax Debt is paid in full. They will only leave you with enough to cover your basic living expenses. Christmas gifts will be out of the question.
Asset Seizure: Although this will only happen if you have plenty of assets to seize to make it worth the IRS's while, the IRS will send their Special Agents to your home to seize multiple cars, antiques, and other valuable assets to liquidate and apply toward the Tax Debt owed. This isn't the picture you dream of when you think of a Happy Holiday.
No Second Chances: I'm surprised at the number of e-mails I'm recieving on the topic of skipping out on Installment Agreement or IRS Payment Plan payments for December. Once you miss just one payment there's no second chances, it will be incredibly difficult to get locked into another payment arrangement with the IRS. If you feel you might miss a payment, contact the IRS to let them know in advance. Maybe you can work something out. And don't think saying you need money for Christmas Gifts will count as an excuse! The IRS will even tell you to cut back on tithing or charitable donations if necessary.
Final Tip: You have to make your Tax Debt obligations a priority, even in the Holiday Season. Focus on removing your Tax Debt before anything else, and you'll be free of it before you know it.