Paying taxes timely must be the priority of every citizen for the well being of its country. Although, at times people fail to do so or deliberately try to dodge paying their taxes illegally which results in IRS submitting tax returns on their behalf. IRS collection process is similar to that of any credit collecting company which at first, notifies you of your debts to remind you to pay your debts timely but after many unfruitful efforts, they might seize your belongings which can be quite troublesome for you.
It is important to pay off your debts and act quickly before the filing deadline. But in case you are in genuine need of some time to pay taxes or going through financial calamities then here are a few pieces of information that have a great impact on the IRS collection process which you must keep in mind to act wisely.
- Unpaid taxes may grant you bad outcomes: Collection of taxes is IRS’s first priority, and they leave no stone unturned to get you to pay your taxes as well. Timely paying taxes, at first, must be your priority in general. Although if you have missed the deadline then, helpfully following the IRS collection process should be your priority. If disobedient taxpayers think that the IRS will forgive their debts after a long time of dodging them, then they are very wrong. IRS settlement, if not done on time, can result in bad outcomes such as the seizure of personal possessions also you might end up in jail.
- Your estimated tax by IRS is comparatively high: In case you do not file a tax return on your own before the deadline, the IRS does that on your behalf. While the process of submitting the tax return by the IRS can be troublesome for you as then, the amount of tax return filed is comparatively higher than necessary. IRS submits your tax returns based totally by estimating from your records. IRS overlooks any credit or deductions that you qualify for which ends up in you paying a high amount of tax than what you were supposed to pay. Although, the government gives you the freedom to file an amendment for the amount of tax you owe so you may get it back. But the process can be tedious.
- You might get your credit score decreased: An owed amount of tax might not directly affect your credit but, if left unpaid for a long time, it can decrease your credit score. The pending amount of your unpaid tax plays a significant part in determining and managing the factor that is your credit score. Tax Liens have a direct influence on your credit, and it can decrease your credit score by a large number.
- Federal tax liens: A federal tax lien is not directly the seizure of your property or personal belongings. But, the IRS claims that they have the right to apprehend it after a taxpayer or business fails to resolve the IRS settlement. A tax lien lets other debt collectors know that the IRS has the first right over the belongings of a taxpayers possessions if they fail to settle it timely.
- Tax levy: The tax levy is the extreme step of the whole IRS collection process. It is the harshest measure of seizing property from any company or taxpayer that fails to resolve its issues with the IRS settlement. The possessions can vary from a car, residence, or any physical property reaching up to your bank account. Yes, the IRS also has the right to take away a part of your working wages to satisfy the pending amount of taxes. If the amount you owe is heavier, then the IRS process will include collecting money from your dividends or your retirement accounts. It might take years for you to get over the effect of a tax levy which is why sincerely paying your taxes is appreciated.
- The time period of debt: The time period of your debt collection process can run from months to many years until the amount is fully received. If you think after a certain short period the amount of tax you owe to the government will vanish from their account, then you are mistaken. IRS remains in effect as many years as they can manage to get the owing amount of tax from your account. Although, IRS cannot collect taxes that are past due for 10 years or more.
- You can hire a professional Tax attorney: It is advisable that you hire a professional tax attorney to solve your grievances relating to the IRS settlement. The collection process will be easier for you while the attorney will also protect your rights regarding it.
Paying taxes on time is very important. But, if somehow you did not manage to pay yours before the deadline, then try to help with the IRS collection process by resolving it timely. It not only helps you to decrease IRS penalties but also gets you away from its long term harsh effects.