What Happens If You Fail To Pay Your Taxes?

What if you can’t pay your taxes?

One of the most dreaded questions on most taxpayers’ minds is “what happens if I fail to pay my taxes?” While there is no single, definitive answer to the question, to say the least, the road ahead is usually not pleasant, unless you take concrete steps to settle the issue. The good news is, there is always a way out, provided you have the guidance of an experienced IRS tax attorney such as Nick Nemeth. While you can always count on the team at the Law Offices of Nick Nemeth to provide you with comprehensive IRS tax help such as tax lien assistance, it pays to be informed. Here is a brief overview of what happens if you fail to pay your taxes. Read on.

Stage 1: Interest and Notices

The first stage after the due date has lapsed is the period during which the defaulter receives a collection letter from the IRS, and the tax body starts charging interest on the outstanding amount. While the annual interest rate charged is about 5 to 6 percent, the IRS may also charge a late-payment penalty ranging anywhere from 0.5 percent up to 25 percent per month.

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Stage 2: Collection Calls and Lien

The second stage is when the IRS starts making calls to collect the debt. The calls can be quite intense and the gravity may increase as time progresses. If a defaulter is still unable to clear their dues, the IRS has the right to mark a lien on their property or financial assets. Though a lien is not the same as “seizure”, it is a claim on the property or assets by the IRS. It is worth mentioning that lien information goes into the defaulter’s public records.

Stage 3: Levy and Passport Restriction

If all the collection efforts fail, the IRS can impose a levy on the defaulter’s assets and may even put passport restrictions to prevent them from leaving the country. A levy is a legal claim by the IRS on a defaulter’s property, after which the tax body gets the right to liquidate the levied assets to cover the debt. The assets usually targeted by the IRS include bank accounts, Social Security payments, fixed property, and even the defaulter’s paycheck.

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How to Make Things Right?

First and foremost, do not procrastinate. While the IRS understands that people may have compelling reasons for being unable to pay taxes, you must come clean in front of the tax body. Rather than avoiding the IRS, which will only worsen the matter, taxpayers must consult an IRS tax attorney to discuss the possible ways through which they can address the issue at hand. The IRS has various provisions to help taxpayers who are unable to clear their debt. To exercise the options, you will need a sound knowledge of the IRS Tax Law.

The Last Word

“It always seems impossible until it’s done.” And it is no different when it comes to issues to do with IRS problems. While all may seem to have been lost when you are up against an IRS debt, there is almost always a way out given competent tax assistance. If you or someone you know has been struggling with an IRS tax debt that seems to be too big of a mountain to climb, speak with the IRS tax lawyers at the Law Offices of Nick Nemeth. Whether you need tax lien assistance or need help with any IRS debt problem, we are here to help you. To schedule a free, no-obligation consultation with a tax lien attorney, simply call us at (972) 484-0829.