The Debt: Wherever it came from, you’ve got an IRS tax debt. Specifically, you’re dealing with the largest collection agency in the world. At the beginning, it may not seem like much. You may get a few letters, but nothing too drastic. But the IRS is known for escalating things quickly. After a second letter, things start to get serious. It’s important that you educate yourself on the things that can happen. Tax Lien: A tax lien can be implemented if you don’t deal with the debt. A lien is basically the IRS’ way of saying they control something. It could be on your credit, which could ruin your future of good credit. It could also be on a piece of property like a house or a car. In those cases, the lien quickly turns into a full seizure and the IRS auctions off the property to pay for the debt. Bank Levy: A levy is usually placed on bank accounts. In this case, the IRS freezes your account and makes sure you can’t get into it. That means you can’t get any money out, and any money you had inside before the levy is now in the hands of the IRS. Your bank manager cannot do anything about this and the only real way to stop it is to speak with a tax professional about your available options. Wage Garnishment: My favorite, and by far the most effective. The IRS extracts a certain amount from your paycheck to pay the debt. Depending on your situation, the IRS can garnish your entire paycheck to pay your towards your tax debt. And don’t think that you’re safe if you don’t work that you’re safe. The IRS can legally garnish up to 15% of your Social Security check as well. Penalties and Interest: The worst part is, while all of this is going on, interest and penalties are accruing. Interest is 6% per year and penalties can be up to 5% per month, up to 25% of the debt. So each year, you’re looking at about 29% of the debt. That would mean it would only take about two years for the debt to double in amount. What You Can Do: Depending on your financial situation, there are several programs that the IRS offers to resolve tax debt. If you’re looking to get rid of your debt once and for all, contact a tax professional that you can trust and get the help you deserve. Now you have the Smoking Gun…Use It!
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