The Treasury Department recently reported that individual income tax collections for the Fiscal Year 2018 totaled $1.7 trillion dollars.
To fully comprehend this staggering sum of money; did you know that $1.7 Trillion Dollars weighs over 2 Million Tons which is the weight equivalent of 1.2 Million Mid-Sized Automobiles. 2018 was a VERY GOOD YEAR for the IRS!
The Tax Lien Highway can be a long and winding road. The IRS can collect on a Tax Lien for up to 10 years. Meaning, they can attempt to collect your unpaid taxes for up to 10 years from the date those unpaid taxes were assessed.
To review, a tax lien is a legal claim against your property that secures the government’s interest in your property when you don’t pay your tax debt to secure payment of that tax debt. The tax lien will attach to all property and assets that you own at the time the lien is filed and any property or assets that you thereafter acquire. The Notice of Federal Tax Lien is a public filing and it will impact your credit.
The IRS can employ various methods in their effort to secure tax debt money from you. One of those methods is the Federal Tax Levy, a legal seizure of your property to satisfy a tax debt.
The list of assets and property the IRS is long.
- Wage Garnishment
- Social Security Benefits
- OPM Retirement Benefits
- Your Business
- Property You Own: Houses, Commercial and Business Property, Vehicles, Boats
- And MORE!
Fear not, there are steps you can take to protect yourself and your assets!
1. PAY IN FULL
If you can afford to pay your tax debt in full, this is the most effective strategy to stop a tax levy. Consult with a skilled tax professional on the best way to go about this. Some options, selling off assets, taking out a loan with a lower interest loan rate can enable you to pay the tax debt in full.
2. INSTALLATION AGREEMENT
This strategy enables you to make monthly payments to pay off your tax debt over time. Generally, you must complete the payments within a 7-year time period or less. Interest continues to accrue, but if you make payments on time, the IRS reduces the failure to pay penalty by 50%.
3. PARTIAL PAYMENT INSTALLATION AGREEMENT
This strategy is similar to the installment agreement except that you would pay what you can afford on a monthly basis. The IRS reviews your financial situation and determines what you can afford on a monthly basis.
4. OFFER IN COMPROMISE
An offer in compromise is when the IRS allows you to pay off your tax debt for less than you owe. To qualify for this, you must meet strict financial criteria. Specifically, you will need to prove that you won’t be able to pay off the tax debt through any other method. The IRS tends to allow this if they believe there is no other way to get more money from you.
5. CNC STATUS
Currently Not Collectible Status is when you can prove to the IRS that you’re facing financial hardship. The IRS considers a financial situation a hardship when the taxpayer is not able to meet allowable living expenses. Once the tax debt is declared currently not collectible, the IRS cannot take your paycheck or property in lieu of tax payment.
Federal Tax Liens can really make your life miserable! When your taxes are not paid, the IRS establishes a lien against your assets. This gives the IRS the legal right to collect taxes from the sale of your assets, which includes just about everything you own!
The best strategy you can employ is to immediately contact a skilled tax professional. At Borshoff Consulting, we are here to make sure your assets are protected from the IRS. Schedule your free consultation today!