• May 19, 2022
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When some taxpayers owe the government but cannot afford to pay, their first instinct is to not file their tax returns. This can lead to serious IRS tax problems when the Internal Revenue Service (IRS) imposes harsh penalties for failing to file taxes. The penalties are usually more severe than those for failing to pay what you owe. In fact, the IRS imposes interest and penalties from the first day you’re late with your filing. In this blog, we are going to look at the common consequences of not filing your taxes or underpaying.

A penalty is inevitable

The IRS charges a penalty of 0.5% of the amount you owe, per month, if you don’t pay your taxes or pay less than what you owe. This fee is charged every month, and can account for up to an additional 25% of your outstanding tax debt. If you don’t respond to an IRS notice of intent to levy, the failure-to-pay penalty rate increases to 1%. This increase occurs 10 days after you get the IRS letter. The penalty is reduced to 0.25% if you set up a payment plan with the IRS. That’s a 50% reduction from the IRS’s usual back-tax penalty rate. If you face such IRS tax problems, it is always recommended that you seek professional assistance from a tax relief attorney.

Must Read: How to Avoid Wage Garnishments

Other consequences

The Automated Collection System (ACS) kicks in after the IRS notices that your taxes are past due. It is then that the CP notices or “computer paragraphs start arriving. The IRS sends out a variety of CP notices, each with a unique number. The first piece of correspondence you receive usually reveals how much you owe and demands payment. For the next two to six months, these warnings will continue to arrive, with each letter becoming more demanding and frightening. If you don’t come up with an appropriate resolution to this IRS problem, the following consequences may occur:

Notice of a Federal Tax Lien

The IRS may establish a lien on your assets if you do not properly respond to the CP notices. A tax lien applies an IRS claim to your property. If you try to sell the affected assets, the IRS has the first claim to the proceeds.

Must read: Tax Lien vs. Tax Levy: Examining the Differences

Tax levy

When the IRS seizes your assets, it is known as a tax levy. This will only happen if you refuse to communicate. The IRS will usually send you a final notice of intent to levy 30 days before taking action. It may take one or more of the following actions, with some being more likely than others.

  • Wage Garnishment: A wage levy is another term for wage garnishment. The Internal Revenue Service calls your company and requests a percentage of your pay.
  • Asset seizure: The IRS has the authority to seize assets such as automobiles, homes, yachts, and other valuables.
  • Bank levy: A bank levy occurs when the IRS contacts your bank asking it to instantly freeze your account, preventing you from withdrawing any funds.


If you know or suspect that you have IRS tax problems, it is imperative to seek help from experienced Dallas tax attorneys to get your mind back at ease. An experienced tax lawyer in Dallas-Fort Worth can offer you the right guidance and representation to deal with a variety of IRS tax problems. If you are looking for help with IRS tax problems, The Law Offices of Nick Nemeth has got you covered. To discuss your IRS tax problems and hear how we can help, call (972) 426-2553 or fill out our contact form.

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What Our Clients Have to Say

Susan WilsonSusan Wilson
03:27 25 Jan 23
I have been very pleased with the solid counsel and guidance that Nick Nemeth has provided me regarding my tax issue. I found him to be honest and straightforward which I appreciated. I was impressed with his relevant experience and knowledge . He has definitely brought me peace of mind during a difficult and stressful time.
Sarah HowardSarah Howard
03:44 14 Nov 22
I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
00:33 07 Aug 22
I cannot say enough good things about Nick and his team. When I first met with Nick he was up front, honest, friendly and efficient. When I worked with one of his attorneys, Eric B, I was just as pleased. All of the staff there are nice and very helpful. I wish I hadn't waited so long to get help with my issue. Over 6yrs I tried getting through and getting anywhere with the IRS and hardly made any progress. I know this may not be the case for all, and even I thought it would take longer than it did, but 3mos and they had my situation straightened out. I still can't believe it. Thank you thank you THANK YOU for all that you did for me. This is a huge burden gone out of my life now thanks to you. If anyone needs help out there, I know you may not want to shell out more money to get their help but it may just save you in the long run.
Spoilly GirlSpoilly Girl
23:49 03 Aug 22
The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
Eddie WaltEddie Walt
19:44 12 Jul 22
During a time in which competent, professional service at a fair price seems to have disappeared, Mr. Nemeth and his team are a refreshing breath of fresh air.From my first phone call to the final settlement of our case with a non-responsive IRS, they under-promised, over-delivered and were in constant courteous contact to make sure we knew exactly what was happening and where we stood.I hope to never need their services again, but, should I receive another friendly letter from the IRS...I know who to call!
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