Receiving an unexpected letter from the Internal Revenue Service (IRS) can make someone’s heart stop for a second or start pounding like they just ran a mile. They may feel incredibly anxious about the possibility of criminal charges or financial consequences.
The IRS frequently assesses significant penalties on past-due taxes. Interest also begins accruing as soon as the payment is late. The IRS may then engage in very aggressive attempts to collect on the tax debt. The following are some of the ways that the IRS can enforce income tax obligations.
Asset seizure
The IRS has the authority to levy or seize certain financial assets. The organization can intercept gambling or lottery winnings. It can lay claim to well-funded bank accounts. Those efforts can significantly diminish an individual’s wealth and may put them at risk of financial hardship. Asset seizure using levies is a relatively common way for the IRS to collect income tax debts.
Liens on high-value assets
Sometimes, the IRS doesn’t necessarily seize assets. Instead, the organization secures liens as a way of forcing people to sell or refinance those resources. A lien against a primary residence may put someone’s homeownership at risk and may force them to take drastic steps to avoid lien foreclosure. Liens not only make assets vulnerable to legal actions but can also prevent the sale, transfer or refinancing of those assets until the taxpayer has fulfilled their financial obligations.
Wage garnishment
The IRS can actually intercept a portion of a taxpayer’s wages. For those already living on a strict budget, wage garnishment can put them at risk of extreme financial hardship. They may fall behind on their other financial obligations because they can no longer balance the household budget. Any of these enforcement actions can worsen someone’s already difficult financial circumstances. Those facing tax controversies and IRS collection efforts may need help looking at their options.
Proposing an offer in compromise or questioning the amount the IRS intends to collect are both viable strategies that can work for people in certain circumstances. The sooner that a taxpayer facing collection efforts gets help, the better their chances of avoiding the most aggressive collection tactics commonly employed by the IRS.
