Filing a Tax Lien against a taxpayer is the initial process by which the IRS or a State taxing authority will pursue collection activity for a tax debt. The affected taxpayer will have a claim placed against his or her assets, and be marked to all potential creditors as a citizen with an unpaid debt to the respective taxing authority. Therefore, the taxpayer will not be able to apply for any credits or loans, nor will he or she be able to sell any of the affected assets. If the affected assets are sold before the lien is removed, the buyer will incur the debt, decreasing the taxpayer’s ability to sell the assets. In essence, the lien prevents the taxpayer from making any profit by means of selling their affected assets.
Taxing authorities will only release a lien once the debt has been paid off. However, if an asset must be sold while a lien is in place, there are certain techniques that United Tax Help can utilize to work around the Tax Lien.
Although a lien is a serious problem, it does not pose the immediate threat that a levy does. A levy ensures that any entity responsible for providing the taxpayer in question with funds of any kind send those funds to the respective taxing authority instead of the taxpayer. Employers, banks, and any other applicable parties will receive Levy Notices, indicating the aforementioned distribution of payments to a respective taxing authority. Once a debt is paid in full, the levy will release. There are some exceptions to this rule, and it is possible to release a levy before a debt is paid in full.
A wage garnishment is a more specific levy that directly impacts the taxpayer in question’s pay check. A letter is sent to the taxpayer’s employer, demanding that a portion, if not the majority, of the pay check be sent to the respective taxing authority instead of the taxpayer. Levies and garnishments can be released once the proper steps to become compliant with the taxing authority have been taken.
Should a balance remain unpaid for a significant amount of time, a taxing authority has the right to seize any assets the affected taxpayer may own. Taxing authorities do not prefer to take this sort of action, due to the difficulties and low profits associated with an asset seizure collection strategy. That is not to say that a taxing authority will not use this collection tactic if necessary. Action must be taken immediately if a taxpayer receives this notice.
Taxpayers have plenty of options to handle their back tax debts, but taxing authorities don’t necessarily want to aid these taxpayers. If the taxing authorities are evasive, it is in an effort to keep the taxpayer in the dark, so as to collect the most amount of money possible from said taxpayer. The longer a debt remains unpaid, the more penalties and interest continue to accrue on the account, allowing the taxing authority to collect more money once the taxpayer finally begins to pay. If the taxing authority was upfront and honest with every taxpayer, they would collect less money, despite helping the taxpayers become compliant. United Tax Help has the answers to all of your tax related questions. If clarification is what you need, you’ve come to the right place.
The day that your debt is actually assessed by a taxing authority, a ten year clock starts ticking. While this is not true of all taxing authorities, it is the most common time frame a taxpayer will deal with in regards to their debts. After the 10 years go by, any remaining debt is written off. Keep in mind that there are exceptions to this rule and it should not be relied upon as a crutch. Penalties and interest accrue daily, so it is not a good idea to try to “outlive” the statute, just in case your situation changes for the worse and your statute is extended.
If you receive a notice from the IRS indicating that you owe a great deal more than you would have anticipated for a certain tax year that is because the IRS filed a tax return for you. If you do not file your own tax return, and allow them to do this for you, you will not be entitled to any credits or deductions, and you will be taxed at the highest rate possible. These IRS filings are known as ‘Substitute for Returns,’ and are incredibly harmful to any taxpayer. It is always a good idea to file your tax returns, even if you cannot afford to pay the taxes you owe for that year. This will ensure that the IRS does not file for you, and you will have a much better shot a paying off your debt at a reasonable fee. Should the IRS file your returns, there are strategies that we can utilize in order to reverse the process.
Without much exception, you must file any changes or corrections to your returns within three years of the original filing date. There are possible ways to get around this time frame, but they are unlikely. Other strategies typically must be employed if three years have passed from the time of filing.