Avoiding IRS Collection Attacks When You Owe Back Taxes

So you didn't pay your taxes and you haven't filed for years...

Let me tell you, the IRS  will be on your tail to make you pay if they haven't already.

If you have not filed or paid on your back taxes, you need to be prepared for IRS Attacks. It's not a matter of if they will hit you, but when they will hit you.


1) The IRS's First Move...

So when you don't pay the IRS, you will receive several notices in the mail. They might seem innocent enough, but you need to take them seriously.

Combat the IRS Attack: Act with the first letter, find help immediately if you don't want to incur the wrath of the IRS Beast.

2) The IRS's Next Move...

I'll assume from here that you ignored those initial "innocent warnings" from the IRS. Well now you're in for it, a letter sent via Certified Mail from the IRS is next. The Real Action will soon follow.

Combat the IRS Attack: If you've received a letter via Certified Mail from the IRS, actions that put your finances, your family, and your way of life in jeopardy are next. Take this seriously and work to resolve your back tax issues.

3) The IRS's Final Blow...

The IRS sent you letters, then certified letters notifying you they intend to levy. You were scared, and you ignored them. Now the IRS is hitting you with Wage Garnishments, Bank Levies, and Tax Liens.

Combat the IRS Attack: The IRS is only using Wage Garnihsments, Bank Levies, and Tax Liens because you ignored their letters and didn't contact them with a solution. You need to work with the IRS and compromise on a solution for repaying your back taxes.

The Fierce Battle: Go in With a Plan. Bring the Big Guns.

Once the IRS has it paws on your paycheck and bank account it won't let go without a fight. You have to go in prepared for battle, but remember what you're dealing with. Your own soldier going after the IRS and all of it's resources and revenue officers.

Go in armed! Work with tax representation firm. Think of them as your army. Just like my Hit Squad they're comprised of tax attorneys, accountants, and CPAs and they will write a battle plan for you that ensures success- then fight to make it happen!

* Attached photo depicts a real IRS Negotiation. I've been there, I've seen the carnage. Call, email, or fill out my form if you need help.

How Can I Remove Tax Liens From My Credit Report?

Tax Liens are the #1 most effective tool the IRS has for collecting on back taxes. 

It's hard to get these bad 

boys off your credit report.

even bankruptcy can't stop it.

And I'm afraid I have even more bad Tax Lien news...

When you finally pay off your tax debt...your Tax Lien remains on your credit report for seven years! You can't remove the Tax Liens from your credit report until they've expired.

This guide will teach you how to Remove Expired Tax Liens from your credit report.

1. Get Copies: You're allowed one free copy of your credit reports annually, so use AnnualCreditReport.com to get a copy of your Equifax, Experian, and TransUnion reports.

2. Review: Check your credit report, if your debt was paid seven years ago and the Tax Liens haven't been removed, you need to dispute the information with the credit reporting agencies.

3. Dispute: You can send an email or letters to the agencies with your dispute. Make sure you keep the emails and letters for your records.

Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
(800) 685-1111

Experian
P.O. Box 2104
Allen, TX 75013
(888) 397-3742

TransUnion
P.O. Box 1000
Chester, PA 19022
(800) 916-8800


4. Send Proof: Make sure you attach documents that prove when the tax debt was paid with your formal dispute to the credit reporting agencies.

5. 30 Days: After 30 days the Credit Reporting Agency should reply with a new copy of your credit report reflecting the changes.

IRS Tax Lien Remains After Bankruptcy- What Should I Do?

It's reader question time again! 

This time I have a question from a taxpayer who had his IRS Tax Debt discharged through bankruptcy.

Bankruptcy didn't end his Tax Debt woes, however. 

Here is "Bill's" IRS Bankruptcy question:

"I filed for chapter 7 bankruptcy this past May and was discharged of my debt. However--IRS has liens on my home which survive the BK.  I want to remove them somehow to refi. 

But the liens are heavy and I don't have the ancillary cash right now to work out a settlement---they are strapping me right now. I need to get the equity out of my house to pay for newer income taxes---seems like a never ending battle."

Here was my response for Bill:

Bill,

I have to tell it to you straight- it appears that the equity in your residence was exempted through the bankruptcy. The IRS can collect on the exempted property even if the taxes were discharged in the bankruptcy. Here is the applicable section of the bankruptcy code:

Section 522, Exemptions.      Provided in this section of the code are property exemptions a debtor may select. The federal exemptions apply unless the state in which the debtor is domiciled has enacted specific legislation authorizing or mandating the use of state exempted property limitations.

   1. Under 11 USC § 362, collection may not be pursued against property exempt under § 522 while the automatic stay is in effect.

   2. Upon discharge exempt property is subject to collection of dischargeable taxes and non-dischargeable taxes for which a Notice of Federal Tax Lien (NFTL) was filed prior to the petition date.

This means that the IRS can foreclose on the Federal Tax Lien that attaches to the property.  The IRS will not remove the lien from the home and pursuing that issue may actually start collection action against the house.

Since the physical lien is a self releasing document, IRS may not take any actions prior to the expiration date of the lien and the lien may self release.  That date is listed on the face of the lien in column "e". 

The Lesson: I've said it before, but Bankrutpcy is not the best way to resolve your Tax Debt issue. People think it just removes their debt from existence, but like in this case, there's usually something extra you have to work with.

Liens linger. Penalties continue to accrue. It's a mess. You're better off finding a way to repay your tax debt in full than to attempt to discharge it through bankruptcy.