Ever wonder what would happen if you didn’t pay your taxes? When deciding which bills are the most important to pay, some people don’t include the IRS as a top priority, believe it or not! Think about it – if you skip utility bills, they shut off your service. If you skip a car payment, they’ll come and take your car away. When you don’t pay your taxes on time, you could go years before you hear from the Internal Revenue Service – but the difference is when the IRS decides to collect from deadbeat taxpayers – you’ll know it.
If you skip filing your taxes for a few years, you’ll probably head to your mailbox one day and discover a letter asking what your problem is – although not in those exact words! The first and maybe the second letter you receive from the IRS will ask you about your liability and remind you that you owe income taxes. Soon after, you can expect to receive a FINAL NOTICE in the mail. This is the last notification you’ll receive from the IRS before they unleash the dogs and come after you for the money you owe. This would be a good time to make good on those liabilitys!
If the letters and FINAL NOTICE did not scare you into paying the money you owe, stay tuned for an IRS levy. A levy is when the IRS puts a hold on the funds in your bank accounts. You won’t be able to access the money in your bank account and if your check is being direct deposited, you can watch it disappear because you won’t have access to those either. Because an IRS levy is a federal lien on your bank account, there won’t be anything you – or the bank – can do to stop it.
The IRS has the power to ruin your credit score for all of eternity. Well, at least through the end of your life. A tax lien can be placed on your credit, which means you won’t be able to apply for new credit. If you own a house, you might experience a tax lien placed on your home, which will make it impossible to renovate or sell. If you’re still standing by waiting to see what happens next and making no plans to pay the IRS owed taxes, you might see the tax liens turn into full blown “seizures”, where the IRS takes it upon themselves to sell your property to recover the taxes owed you owe.
If you were lucky enough not to have direct deposit of your paychecks when your bank was placed on hold, you can still lose your paycheck through wage garnishment. The IRS has the power to contact your employer and take up to 80% of your paycheck each pay period until your taxes are paid off.
Obviously, the solution to avoiding IRS attacks is to file your taxes and pay for any taxes owed. You don’t want to be on the receiving end of any of the above “attacks”; or put in jail with penalties up to $50,000 per year for not filing your income taxes. You can always file for extensions if you need more time, set up federal tax payment plan if you can’t afford to pay your taxes in full before they’re due, or use an agency designed to help individuals pay off back taxes.
This post was published on June 22, 2010