IRS Collection Tactics

IRS Tax Settlement

THE IRS is one of the most difficult and aggressive creditors around. The IRS does not stop until tax debt is either collected or resolved. IRS agents have multiple enforcement methods for collecting overdue taxes. These methods can range from placing tax liens against assets to seizing a person’s home. Below is a list of the major collection activities available to the IRS against someone that owes past due taxes.

A FEDERAL TAX LIEN may be placed against you by The Federal government in the County that you reside. This lien secures the government against any asset that you own, including personal property, automobiles, financial accounts, and even your home. The lien is against anything you own at the time of the lien as well as future acquired property. The lien is a public record and is discoverable by third parties. Since it is a public record, it is likely to be found on your credit report. It could impact your ability to obtain credit, obtain assets, and transfer assets.

A LEVY is a way for the Federal government to take, or to seize your property, in order to satisfy your IRS tax debt. An IRS levy can be against your wages, against your personal property, like a vehicle, or even against your real estate.

Unlike regular creditors that are limited to only garnishing up to 25% of your wages, the IRS can garnish at a much higher rate. In some circumstances the IRS can garnish up to nearly 90% of a person’s wages. The limitation is based on the amount of allowable deductions a taxpayer has on his/her tax return.

The IRS can levy against your personal property. This means the IRS can take and sell your automobiles, stocks, bonds, and in some circumstances retirement accounts. Please remember, this is not placing a lien against these assets, but actually seizing the assets, and selling the items to pay down your tax debt. Unlike regular creditors, the IRS is not prevented from attacking retirement accounts and other tax exempt assets. Bank account levies result in garnishment of funds being held in a person’s account leaving them unable to meet monthly financial obligations.

The worst type of IRS levy would come in the form of a seizure of your real estate. This is typically a rare activity conducted by the IRS, but the IRS does have the ability to seize your home, and then to sell it in order to satisfy your tax obligations.