My people feel that if they let their tax debt go unresolved, the IRS will just forget about it. Now we all know that there are several reasons why a person might owe the Internal Revenue Service. This may include a financial hardship that hinders your ability to pay tax liabilities or failure to file your yearly tax returns. Regardless of the cause, when you find yourself on the receiving end of and IRS collection notice you have a major problem on your hands if you fail to take the appropriate actions.
Is There A Statue of Limitations for Tax Debt?
Dealing with debt collectors is no fun as the stress and anxiety that accompanies the collection process is designed to chip at you until you can not take it anymore and just settle. Some consumers might even be familiar with the Statue of Limitations or amount of time allowed by law to collect a debt. Unfortunately the IRS is not the average debt collector nor do all the same rules apply to their collection efforts. While many debts may become “un”collectible after the set number of years have passed (per each states Statute of Limitations), the IRS can collect on unpaid taxes for up to ten years without special circumstances. If you owe back taxes from 10 years ago or longer, you might feel you are safe from the long arm of the IRS collection department. That would be an inaccurate assumption and one that could cost you dearly. Here are a few reasons why the Statue of Limitations for the IRS may go beyond the standard ten year rule.
- The taxpayer has been out of the country.
- They filed a bankruptcy of some sort.
- You have a lawsuit by the IRS.
- Taxpayer signs a waiver form.
What Can The IRS Do To Me?
Assuming that the taxpayer has met these certain conditions like those listed above, the IRS may extend the length of time allowed to legally collect on back taxes. For this reason it is important to fully understand your rights and obligations when it comes to money owed to the IRS. Other incentives to satisfy your tax liabilities include the following:
- Levy- When the IRS decides to take aggressive collection actions, you may find yourself on the receiving end of an IRS levy. This occurs when the IRS places a federal lien on your bank account, basically freezing you out of your own bank accounts.
- Lien- The IRS can also place a lien on your property and credit. This can lead to the seizure of assets that will then be sold in order to satisfy your debt to the IRS.
- Wage garnishment- The IRS may decide to hit you where it hurts immediately, your paycheck. Your employer will be contacted and required to withhold a percentage of your paycheck (up to 80%) to be used to pay off your tax liability. If your employer does not comply with the IRS’ request they are committing a federal offense!
The best way not to get into this kind of trouble is to make sure that you pay your taxes! If you allow your self to get into trouble with the IRS, the average person will endure extreme financial hardship by these actions. When it comes to the IRS and tax laws, most people will benefit greatly by consulting an IRS tax lawyer or tax professional to help guide them through the process.