The IRS has a reputation for being ruthless and terrifying. While this may not necessarily be true, it may seem so if you have fallen behind on your taxes. The fact is that the IRS does have power that other creditors do not have to collect what it wants you to pay. However, the agency also offers numerous options to satisfy any debt it claims you owe.
If you are behind on your taxes or other bills, you may be tempted to leave your mail unopened, especially those envelopes with the IRS logo. This may be the worst decision since ignoring the demands for payment from the IRS can lead to swift and severe consequences.
Levy options
Falling behind on a credit card payment or even your mortgage may lead to some anxiety about what will happen next. Your creditors will have to win a lawsuit against you to take action to collect a debt that is delinquent. In other words, your mortgage holder cannot simply swoop in and take your home without completing a long, legal process. This is not necessarily true for the IRS.
When you owe income taxes, the government does not need a court order to collect on your obligation. The IRS can simply use a levy of one form or another, including these and other methods:
- Garnishing your wages forces your employer to withhold a percentage of your pay and send it directly to the IRS until you have paid off your debt.
- A bank levy blocks you from taking money from your account for 21 days, after which the bank will withdraw the money, going as far as emptying your account and sending it to the IRS.
- The IRS may capture any of your tax refunds, including those from Connecticut and local taxes.
- The IRS can also seize your property, including your home and vehicle, and apply the proceeds from their sale to your debt.
The good thing to know is that these steps do not happen without ample warning. This is why it is important to open your mail, so you know where you are in the collections process. At any time before the levy occurs, you may be able to take appropriate steps to stop the process. Even if you cannot repay the full amount of the debt, you may be able to negotiate with the IRS if you have the right assistance.