When your tax return shows a balance due, you have many options. But you will need to make some careful decisions, in order to have some control over what happens if you owe the IRS and can’t pay your tax bill.
Here’s some important things to remember if you have a large balance due to the IRS, and why you need professional assistance.
When you have a balance due to the IRS (or to your state tax agency), it is crucial that you take immediate steps to contact them to discuss your situation and present them with a plan. For example, most of the beginning steps of the IRS collection processes are computer automated. The computer will continue marching through each phase of the collection process unless you take action to have the process placed on hold. This can include seizing the money in your bank accounts, garnishing your wages from your employer, and even taking personal property and real estate.
If you receive a Notice of Balance Due from the IRS and your choice of action is to ignore it and do nothing, then you will receive a progression of notices from the IRS. Eventually you will receive a Notice and Demand for Payment. Penalties and interest on the balance due will be accumulating every day. If you continue to ignore this notice, then soon you will likely receive a Notice of Federal Tax Lien as well as a Notice of intent to levy your wages or bank account.
A Federal Tax Lien will allow the IRS to place a general lien on any and all property that you own and will legally allow the IRS to receive payment when you sell any titled property, such as a house or car. Sometimes they even move to seize vehicles and real estate. The Federal Tax Levy will allow the IRS to contact all banks where you may have an account and to seize the funds, up to the amount of your tax debt. The levy will also allow the IRS to order your employer to pay them a large portion of your wages, possibly leaving you with less than $200 per week to live on.
The IRS can also seize current and future tax refunds until the tax bill is paid. During this time, you may also receive phone calls from the IRS, and if the debt is large enough, they may even assign a local Revenue Officer to your case, who may visit you at your home or work, trying to collect the taxes owed.
You should note that the Federal Tax Lien is a public notice and it will affect your credit rating.
When you receive an IRS audit, it can be a frightening occasion and it is difficult to discover what you must do next. Many people are not sure about how to safely proceed when they were picked for an IRS audit. Call us and let us guide you through what needs to be done to protect yourself.
Currently Non-Collectible Status and exactly what it implies: