Owing the IRS Back Taxes: Know the Steps to Collection

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. Not only do they seize any and all funds in the account, but you get locked out of the account. This means that you aren’t able to access your own money. This may seem ridiculous, but it’s perfectly legal. The worst part is, there is nothing you or your bank can do about it.

Tax Lien: This is the IRS’ silent killer. When they use this form of collection, it’s usually not effective as immediately 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. Plus, even if you get the lien removed, it can make it very hard to rebuild your credit from that state.

Wage Garnishment: My personal favorite, this is the IRS’ secret weapon. A good IRS-Hitman knows just how powerful a wage garnishment can be. This tactic goes straight to the source; your paycheck! The IRS can legally garnish up to 80% of your paycheck in order to pay your debt. In some cases, 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!