The IRS enforcement has several tools at its disposal for business owners and individuals who owe back taxes, The consequences of unpaid tax debt can be severe, ranging from tax liens and levies to passport revocation. Understanding these enforcement actions is critical for those who want to avoid financial hardship and legal complications.
What Is a Tax Levy?
A tax levy is one of the most aggressive actions the IRS can take against a taxpayer who has unpaid tax debt. Unlike a tax lien, which is a claim against property, a levy allows the IRS to seize assets to satisfy the debt. This may include wages, bank accounts, accounts receivable, and even physical property.
Types of IRS Levies
- IRS Bank Levy – The IRS can place a levy on a taxpayer’s bank account, freezing available funds and eventually seizing them if the debt is not resolved.
- Tax Levy on Paycheck – The IRS can garnish wages, deducting a portion of each paycheck until the outstanding balance is paid.
- Tax Levy on Accounts Receivable – Business owners can face levies on incoming payments from clients or customers, severely impacting cash flow.
- IRS Tax Garnishment – Garnishment can extend beyond wages to Social Security payments and other sources of income.
How to Stop an IRS Garnishment
Stopping an IRS enforcement levy or garnishment requires immediate action. Taxpayers can negotiate payment plans, file for an Offer in Compromise, or request an IRS levy release under specific circumstances. Seeking assistance from tax professionals, such as the experts at Total Tax, Inc., can help navigate these complex processes.
Notice of Federal Tax Lien
A tax lien is a public record that indicates the IRS has a legal claim against a taxpayer’s property due to unpaid taxes. The presence of a notice of federal tax lien can negatively impact credit scores, making it difficult to obtain loans, sell property, or conduct business transactions.
Tax Lien on Property
A tax lien on property can prevent a taxpayer from selling real estate or refinancing a mortgage. The IRS may even seize and sell property if the tax debt remains unpaid for an extended period.
Passport Revocation for Unpaid Taxes
The IRS can restrict a taxpayer’s ability to travel by notifying the U.S. State Department of delinquent tax debt.
- Can I Get a Passport if I Haven’t Filed My Taxes? If a taxpayer owes $64,000 or more (adjusted annually for inflation) in back taxes, the IRS may issue a certification of “seriously delinquent tax debt.” This can lead to passport denial or revocation.
- Passport Revoked for Back Taxes Taxpayers who receive a certification notice from the IRS may have their passport application denied or their current passport revoked. Resolving the debt or entering into a payment plan is essential to restoring travel privileges.
How to Avoid IRS Enforcement Actions
To prevent tax levies, liens, or passport issues, it’s essential to stay current on tax filings and payments. For those already facing enforcement actions, options such as installment agreements, penalty abatement, or an Offer in Compromise may provide relief.
How Total Tax, Inc. Can Help
Total Tax, Inc. has been assisting business owners and individuals with IRS and state tax relief for over 35 years. With a team of experienced CPAs, IRS Enrolled Agents, and tax attorneys, Total Tax, Inc. specializes in helping taxpayers resolve back tax issues, release levies and liens, and negotiate with the IRS to achieve favorable outcomes. Whether you need help setting up a payment plan, filing missing tax returns, or stopping a wage garnishment, you can trust Total Tax, Inc. to guide you through complex tax matters.
Understanding the consequences of IRS enforcement can help taxpayers take proactive steps to protect their finances and legal standing. Consulting with experienced tax professionals is often the best course of action for resolving tax debt and avoiding further complications.
