The IRS can be one of the toughest government agencies of all. Though FBI agents carry guns to defend themselves they can’t for example force your bank to pay money into the US Treasury’s account without a court order, unlike the IRS! Let’s now look at the powers the IRS has to get you to pay your tax debt – and how best to avoid it.
Federal tax lien
A federal tax lien will often be given soon after you receive your letter warning you of your unpaid tax debt. If you fail to make contact with the IRS at this stage then in some cases it will alert credit reference agencies of your unpaid taxes, and this will prevent you from getting all but the most expensive loans or credit cards. Think of the federal tax lien as the worst of all markers on your credit record.
The IRS can seize your assets and money without recourse to a court. This is what makes the agency so powerful and feared.
One of the simplest actions for the IRS to take is the ‘wage levy’ or wage garnishment where it can force your employer to pay a proportion of your income out direct to the US Treasury.
As we indicated at the top of this article, the IRS also has the power to get a bank to tell them what you have in your accounts – and then to seize that money – without recourse to the courts.
There are many state incomes and pensions that the IRS can seize money from too. Only certain disability welfare payments and unemployment benefits are exempted. If you are on Federal Old-Age, Survivors and Disability Insurance Benefits these can be subjected to a 15% levy.
These levies don’t just apply to your income and savings. If you have a holiday home or a second home (such as the ‘snowbirds’ of New England and Florida) the IRS can seize ownership of that and sell it on. You will still have to pay any monies due after the sale of the asset too. Car owners aren’t safe from this, as are people who own stocks and shares.
Revocation of your passport too?
Perhaps showing that you can’t run very far from the IRS – even to the other side of the planet – it has the power to nullify your passport. Without that, you can’t get from a foreign country to a foreign country while you’re on the run from them. The only way to get a travel document is to go to the nearest US Consul or Embassy who will issue you with a temporary travel document valid only for travel to the USA.
On arrival to the USA, you won’t always be arrested but you will be encouraged to make contact with the IRS to resolve your tax debt with them.
There is one notable and honorable exception to the IRS doing this – if you are in a combat zone working for the US government in an official role. You could be a Marine shooting the enemy or working for the CIA – as long as you are on government business you are exempted from this.
How to stop all this?
If you owe the IRS money and are reading this, you could be feeling a little anxious just now. Given the powers that the agency has it wouldn’t be surprising! Forgetting that the IRS enforcement teams are far smaller relative to their job than any time in history and are overstretched, there are perfectly legal ways forward in stopping any collection or other actions against you.
- Pay off your debt in a lump sum. This is the whole aim of the enforcement actions we discuss above.
- Agree to an installment plan with the IRS if you don’t have the funds immediately
- If you would prefer to sell assets as opposed to them seizing those assets you can request a delay in enforcement action. Once they are confident that you are selling the house/car/gold bars they will desist
- Get in contact with a tax debt relief company like Defense Tax. We can offer advice and support in you resolving your tax debt issues.
Essentially all these enforcement actions are designed to force you to the table and negotiate a way out of your tax debt to the government. The sooner you do the less likely they are to enact them.
Contact Defense Tax today!
If you have had a letter notifying you of enforcement action from the IRS, then it may pay you to get advice and support from a tax debt relief company with experience and track record in resolving people’s tax issues. Contact us today to discuss your problems with us!