How fast can the IRS take my money if I owe back taxes?
Let’s talk hypothetically — you owe back taxes and want to resolve the issue as quickly as possible. However, you want to resolve this solution on your own before the IRS steps in and makes things more complicated and fiscally devastating. Can you?
The simple answer is “yes”. Without proper communication and action, the IRS will eventually begin taking your funds, but it isn’t the case that the second after the tax deadline passes they’ll be knocking on your door, looking for the money you owe them. The IRS works through processes, legalities and paperwork, so you have some time to deal with the issue on your own before hearing a peep from the dreaded collection agency.
But even if the IRS doesn’t act immediately, when will they? What happens during the waiting period, and what will the IRS do when the time comes?
The Time it Takes
While the IRS does work with some automated processes, most things aren’t immediate when it comes to corresponding with agency. Going back to the above hypothetical, let’s say that you didn’t pay your taxes for the current tax year. The April 15th deadline comes and goes, and you filed but didn’t send the IRS any money.
From here, the IRS will take anywhere from two to three weeks to calculate what you owe and begin to bill you for it. The penalties will begin to go into effect as soon as you’re late with payment, but enforced collection won’t occur until they send out at least three bills to your mailing address. These bills will typically be sent over a six month period. When no response is received, the IRS will then send your tax debt to the IRS Collection Division for eventual enforcement action, which may include a tax lien, bank levy, wage garnishment, and more.
Taxpayer vs. IRS Filing
Again, hypothetically — let’s say that instead of not paying taxes that you filed for, you instead didn’t file your tax return at all. From the perspective of the law, not filing a tax return is an even bigger offense that not paying a tax balance. It can take months for the IRS to discover that you should be paying taxes but didn’t file, and once they do, then letters will be sent out insisting that you file a tax return.
If these requests are ignored, the IRS will eventually file a tax return for you. This may be music to your ears — “the IRS will do my taxes for me?! Wonderful!” In reality, however, this is an unfavorable position to be in since the IRS-prepared tax return does not provide you with every deduction and credit you deserve, overestimates your actual income, and automatically gives you filing status of single. This usually results in an inaccurate and way overstated tax liability. A tax liability that the IRS now wants to collect from you via all means necessary.
Forms of Collection
Once the IRS begins the process of collecting your debt they use a variety of methods to make sure they get paid:
- Wage Garnishments
- Bank Levies
- Intercepting Accounts Receivables
- Liquidating Retirement Accounts, Pensions and other accounts
- Tax Liens
- Asset Seizures
All of these methods of collection have varied time constraints, and some may take longer to go into effect than others. However, once the collection process has started, there will be quick action on the end of the IRS.
What Can I Do?
Ignoring the IRS is the worst solution to this problem. Some taxpayers get overwhelmed and find it hard to take action. Instead, taxpayers should be proactive and go on the offensive. The IRS is much more willing to negotiate and offer leniency to someone who is offering a resolution instead of dodging their letters and notices. Taxpayers can take advantage of consultations offered by most professional tax relief firms for guidance on what initial steps to take. They can also talk to the IRS for you, as well as offer the best solution to your specific tax predicament.
Landmark Tax Group is a professional tax resolution firm that specializes exclusively in IRS and State back tax issues. Not only are we licensed Tax Relief Specialists we are also former Senior IRS Agents who now serve the best interests of taxpayers like you – all we do is handle IRS and State Tax Relief matters, all day every day.
Learn how we can help with your tax matter. Visit our Help Menu today for immediate assistance from our Licensed Enrolled Agents and former IRS Collectors. We look forward to serving you!