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Owing back taxes to Uncle Sam is never a fun position to be in. If you’ve ever had personal experience in this department, then you know what a headache it can be to figure out how to find some tax relief. The key to keeping Uncle Sam happy is to keep paying him. What if your tax debt is too large for you to pay? At Ideal Tax Solution, we always advise our clients to do something, anything, to stay not only in communication with the IRS, but to pay your back taxes. This doesn’t have to be all done at once. The government is always happy to accept payment plans, as long as they are getting something.
Once you stop paying, that’s when the real trouble begins. You can find yourself on the wrong side of a lien, levy, or garnishment. Today, we are going to take a look at what each of those is and why you’ll want to do everything in your power to avoid them.
What is a Lien?
When you are experiencing tax debt, the IRS can go as far as issuing a lien. A tax lien is when the government takes your debt and places it against your physical property. This can be anything from the home you own, to the car you own. Any valuable physical asset you have is fair game. This means when the time comes for you to sell your home or vehicle, the IRS is entitled to collect the amount owed right on top of your sale. Yes, the government will take their piece of the pie before you get yours.
What is a Levy?
The IRS will take many steps to attempt to collect the amount of money you owe. After sending written notices and not getting any response, the government has the authority to issue a levy. This means that the IRS can go into your bank account and take out the amount they are owed directly. They can either take a partial amount of the tax debt, or all of it. Depending on your finances, this could possibly wipe out your entire cash holdings. Not the best way to get tax relief!
What is a Garnishment?
Wage garnishments are one of the most painful ways the IRS can collect back taxes, other than a levy. A wage garnishment is when the government decides to take a portion of your wages in order to service your tax debt. The garnishment will continue until the amount is paid in full.
A lien, levy, or garnishment is nothing you want to take lightly. The good news is that all three are completely avoidable. At Ideal Tax Solution, we provide the kind of professional tax help you need. Even during these uncertain times of COVID-19, we can work with you to help you get back on your feet and eliminate your tax debt. Contact us today to see how we can help you!
The content of this post is not intended to replace the advice of a licensed tax professional. Consult a qualified tax professional for questions specific to your individual circumstances.