It may feel tempting to ignore tax debts but the IRS can eventually force you to pay using various tools such as liens, levies, and wage garnishments. Ignoring your tax debts can lead to serious consequences. The good news is that with professional IRS debt help, you can apply for IRS debt relief options such as a simple extension of the time you have to pay or entering into a monthly payment plan. In this blog post, we will discuss some common yet serious consequences of ignoring IRS debt.
Suspended Tax Refunds
This is the first action taken by the IRS against taxpayers with outstanding taxes. If you have unpaid taxes but have a tax refund that is due to you, the IRS can suspend the refund until your debts are settled. If you have been granted a payment plan such as installment agreement, the IRS can still suspend your tax refunds. The amount withheld will be subtracted from your tax debt, reducing interest charges.
Related Blog: A Look at the New 2021 Income Tax Brackets
Hefty Penalties and Interests
The IRS charges a failure to pay penalty on the amount of tax owed at the rate of 0.5% per month. If the IRS has sent you several notices for tax collection and you haven’t responded appropriately, the interest amount can be doubled to 1%. You can easily bring the penalty rate down to 0.25% by setting up a payment agreement with the IRS.
Federal Tax Lien
If you fail to pay your tax debts even after receiving a notice, the IRS can file a Notice of Federal Lien. This way, creditors get all the information about your tax debts and it becomes really difficult to sell property with a tax lien. Additionally, federal liens are public notices that can give you a bad image which is a bad thing for your financial health and business.
Related Blog: All You Need to Know about IRS Cancelled Debt
Seizure of Your Money and Assets
The IRS can also seize your money and assets by filing a levy if you have unpaid taxes. Some common levies include wage garnishment, Account Receivable Levy, and Bank Levy. Levies can create a big hassle and be devastating for both individual taxpayers and businesses. It can disrupt the cash flow and affect your ability to pay your bills, effectively restricting you from carrying out your daily business operations.
Wrap Up
Unpaid taxes can bring serious consequences if they are not resolved on time. If you or a loved one is looking for IRS tax help in or around Dallas, Texas, look no further. The Law Offices of Nick Nemeth gives you access to a team of seasoned tax attorneys in Dallas, Texas. We have a proven track record of helping clients solve IRS tax issues including IRS debt relief. To talk to one of our attorneys at (972) 426-2553 or fill out our contact form, and we will take it from there.
