If you owe back taxes to the IRS, you may feel a constantly looming dread that repossession men are going to appear on your doorstep at any moment. This constant low-level anxiety can be detrimental to not only your mood but both your mental and physical health. If you know that you have a problem with your taxes, then you should seek tax help as soon as possible. This is a problem that will only grow if you try to ignore it.
From the moment that you owe the IRS tax, they will begin to charge you interest on your back taxes. The interest is applied daily, which means that the amount you owe can quickly mount up. The interest will only cease to be applied once you have fully paid back the taxes that you owe. The interest rate can also increase, as it is recalculated every quarter.
Any amount of back taxes that you owe is going to grow and grow with time, so you should deal with it as soon as possible.
Federal Tax Lien – Once it has been identified that you owe the government back taxes, they will apply a federal tax lien. This is basically a notice to creditors that says the government has first call on your property and assets. This can affect your credit score and your ability to get insurance.
Federal Tax Levy – If you have failed to resolve the issues raised by the tax lien then the next step that the IRS can take is the tax levy process. This involves the seizure or sale of your assets. This can be done by bank levy or direct seizure of physical assets.
Wage Garnishment -This is an option that may be taken once a federal tax levy notice has been given. Your employer will be requested to hold back a portion of your salary. The amount that can be held back is limited in each pay period so you will never have the entirety of your wages withheld, it is around 25% as a maximum. It can go on for a long time until your debt is repaid.
There are a few options open to you to deal with back taxes, but depending on your situation you may not be able to use them all. Remember the IRS is the largest and most aggressive collection agency in the world. If you are at all unsure then you may need to acquire some IRS help from a company like Defense Tax to aid you in resolving the situation. They can help you explore the following options.