As an Illinois tax attorney, I often receive questions from clients regarding the IRS’s power to seize assets or garnish wages for unpaid taxes. In this post, we will explore the authority the IRS holds in collecting back taxes and discuss strategies to navigate IRS collection actions. Understanding your rights and options is essential for protecting your assets and income while working towards resolving your tax debt.
Can You Explain the IRS Collection Actions?
Yes, the IRS has the authority to take various collection actions to recover unpaid taxes. These actions can include seizing assets, garnishing wages, placing liens on property, and levying bank accounts.
The IRS may seize your assets, such as real estate, vehicles, bank accounts, and other valuable property, to satisfy your outstanding tax debt. However, they typically exhaust other collection efforts before resorting to asset seizure.
If you have unpaid taxes, the IRS can also garnish a portion of your wages or salary directly from your employer to fulfill your tax obligations. Wage garnishment can have a significant negative impact on your financial stability.
The IRS has the power to levy your bank accounts, allowing them to seize funds from your account to cover your unpaid tax debt. This can create financial hardship and disrupt your cash flow.
How Can I Protect My Assets and Income from IRS Collections?
The best place to start is to open communication with the IRS – it’s crucial. Have your tax attorney respond promptly to any IRS notices or correspondence, and provide accurate and complete information to establish a line of communication.
Consulting with a tax attorney who specializes in IRS collection matters is invaluable. They can help you understand your rights, negotiate with the IRS on your behalf, and develop a strategy to protect your assets and income.
An offer in compromise (OIC) is an option to settle your tax debt for less than the full amount owed. It can help you avoid asset seizure or wage garnishment. However, qualifying for an OIC can be challenging, and professional guidance is crucial.
Negotiating an installment agreement with the IRS allows you to make monthly payments over an extended period. This option can prevent more drastic collection actions while providing a manageable way to satisfy your tax debt.
If you are experiencing financial hardship, you may qualify for currently not collectible (CNC) status. This status temporarily suspends IRS collection efforts while you improve your financial situation.
If you owe taxes due to your spouse’s actions or inaccuracies on a jointly filed tax return, innocent spouse relief can protect you from being held responsible for the tax debt. Seeking professional assistance is vital to navigate this relief option.
The IRS considers your financial hardship when determining collection actions. Providing documentation and evidence of your financial situation may help protect your assets and income.
Take Proactive Measures to Thwart IRS Collection Actions
Ensure timely filing and payment of your tax returns to avoid accumulating additional tax debt and potential collection actions.
Openly communicate and negotiate with the IRS to explore feasible options for resolving your tax debt. It may be willing to work with you to establish a suitable repayment plan.
Understanding the IRS’s power to seize assets or garnish wages for unpaid taxes is crucial for protecting your financial well-being. By seeking professional assistance, understanding your rights, and exploring available options, you can navigate IRS collection actions and work towards resolving your tax debt. Remember, proactive measures such as communication, negotiation, and seeking legal guidance can help protect your assets and income while finding a manageable path to resolve your tax obligations.