What To Do If You Fail To File Your Income Tax Return On Time
23rd April 2010 by Tax Man No CommentsThe IRS is empowered to assess liens and levies to obtain payment of an income tax debt. A lien is a legal claim on an asset; a levy lets the IRS seize property to obtain payment of a tax debt. The IRS may seize any personal property to secure payment of your income tax debt: houses, cars, boats, cash in accounts, insurance policies, securities, or salaries and wages. If the IRS levies your bank account, the bank is required to freeze all funds in the account. If you don’t settle your debt with the IRS within a stipulated time period, the IRS will keep the money.
Before the IRS can levy your property, they must send you a notice and demand for payment. If you ignore the notice or simply refuse to pay, you can expect the IRS to take levy action. In this case, the IRS must send you a notification of their intent before they seize your property. However, if the IRS has reason to think that this delay could hamper their efforts to obtain payment, they are empowered to take the property at once.
Here’s what to do if the IRS notifies you of their intent to levy your property:
1. Don’t waste time. Retain a tax attorney immediately.
2. Try to make a compromise offer. The IRS will sometimes accept a lesser amount as full payment of all tax liability.
3. Try to make an installment agreement. If you can show the IRS that you’ll be able to pay off your debt in the near future, they may decide to stop action against you.
As a last resort, taxpayers who can’t pay their income tax may file for protection under bankruptcy laws. This will stop the IRS from acting, but filing for bankruptcy is not a measure to be taken lightly. Consult with an experienced attorney before you file for bankruptcy.
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