If the IRS repeatedly notifies you of an outstanding tax debt but doesn’t receive payment they may eventually institute a lien or levy to collect the taxes owed. If you’re the victim or a federal tax lien or levy or if you’ve received a tax notice, don’t wait, call Belbol & Associates at 201-523-9442 now. Although the IRS is determined to get their money, they are often willing to work out a more reasonable solution with qualified New Jersey CPA tax professionals like us. We speak their language and know how to negotiate a settlement that satisfies them and allows you to pay the tax debt over time.
When the IRS issues a public Notice of Federal Tax Lien this alerts creditors that the government has a legal right to your property. In this case they don’t actually confiscate the property but use the lien as security for the outstanding tax debt. A lien can be attached to business property including accounts receivable and can continue even if you file for bankruptcy.
A tax lien can hold you back financially from making important purchases that impact your quality of life. Because a tax lien is public it can inhibit your ability to secure a loan you need to buy a car or to get a mortgage to buy a home.
In more serious cases the IRS may use a levy to seize and sell property such as a boat, vehicle or home in order to pay off the tax debt. They can also levy property that’s not in your direct possession such as your wages, 1099s, bank accounts and even your retirement accounts. The types of federal tax levies include:
Once the IRS issues a Notice of Intent to Levy they can freeze your bank account 30 days later. The IRS can only seize the funds that were already in the account the day it was frozen by the bank
The IRS can garnish the earnings of independent contractors by going after their 1099 payments. With traditional wage garnishment of an employee only a percentage of a paycheck can be levied. However, for a 1099 levy an entire check owed to a contractor will be seized.
Believe it or not the IRS can go after assets that are usually protected like social security or retirement accounts. They can levy pensions, profit sharing, stock bonus plans, IRAs and others. The rule is, if the taxpayer has the ability to withdraw money from a retirement account, the IRS can seize money from that account.
The IRS can garnish your wages to collect a tax debt. This often leaves people without much money left to pay their weekly expenses. Learn more about how to end wage garnishment>>