IRS Tax Debt and its Consequences

By business-news
May 9 2019

What is the IRS Tax Debt?
IRS tax debt can be defined as the debt which is related to the failure of tax payment to the state or the federal government on the earned revenue. Any of the tax debt which is unpaid can result in grave consequences and can be as severe as jail time in the US. The government holds the capability to enhance wages and place taxes on one’s property for all the unpaid tax debt. As explained below, if you owe over $10k in tax debt, you should immediately call a tax attorney.

 

What are the Consequences of Tax Debt?

Here are the various grave consequences of the IRS tax debt:

1.      IRS Notifications:
The IRS is supposed to notify you about your tax bill and will therefore, send in various notifications before getting anything else done such as assembling your balance with implementation tools. The IRS letters and notifications often come off as mere nuisance, which if ignored, can even cause greater issues.

2.      The IRS will place you in an Automatic Collection:
If the formerly mentioned notifications are ignored, the IRS Automated Collection System (ACS) is likely the next stop for you. This is a principal IRS function which collects the taxes back. ACS is also able to issue levy bank accounts, salaries and liens. If a person does not obey the deadlines, the ACS starts sending out notifications which explain more grave consequences.

3.      Building up of Interest on your Balance:
In addition to your tax bill, the IRS will also keep adding interest to the amount. With the increasing balance, the interest increases as well. At present, this occurs at the rate of 5% annually.

How to Get Rid of the Tax Debt?
One can get rid of the tax debt in various ways. If you feel there could be a mistake in the total taxes that the IRS says you need to pay, you must contact the IRS, provide evidence, and make efforts to get the tax erased or decreased. This will result in the decrease or end all the fines and interest entirely. Another option could be for you to contact the IRS so as to get an installment arrangement. This would decrease your penalty rate and also gets you rid of the IRS given that you don’t avoid the installment contract. You can also try to negotiate reduction of few of your penalties centered on good agreement history or first time if this was the first time you owe debt to IRS. Other ways for the abatement of your taxes can be through valid difficulties like any death or illness in your family etc.

Owe $10,000-plus? Hire an attorney:
If someone owes an amount as great as $10,000, one must consider hiring an attorney to discuss with the IRS. There are various payment plans and a skilled lawyer would help you get good deals. An advocate can also assist you in avoiding a tax lien being evaluated against you, which can actually disrupt your credit. However, care must be taken in choosing the attorney for this process because a number of tax-debt resolution rip-offs have been reported. Speak with a tax attorney now.

Bottom-line:
Having accumulated tax debt on any amount can have various grave consequences and if you’re dealing with some major tax issue, then you must hire a reputable attorney to deal with it and you’re good to go!