Many people get confused when it comes to IRS policies.
Maybe they're so traumatized at the thought of having to deal with the IRS that they'd rather not delve too deeply.
However, it's important to understand what happens when you don't pay your Federal taxes.
You may be surprised to learn that if you are delinquent on your Federal tax payments, the IRS can institute a tax levy on your property.
Some have heard of a tax lien and think that a lien and a levy are the same thing, They're not, and the difference is important.
With a lien, the IRS legally puts a hold on your home or other property as security for the debt.
With a levy, it confiscates that property and sells it to pay the debt.
The property can be real estate, but it can also be bank accounts, 401K's, wages, social security, federal payments, or state tax refunds.
Any source of funds that can be seized to pay the back taxes is taken.
A legal process is necessary for this levy to be put into play.
First you must receive a notice that there are back taxes due.
When you ignore that notice and don't pay, there's a final notice hand delivered or left at your home that says you're entitled to a hearing.
If you don't reply, the levy process is begun.
Loss of your home or other resources is devastating enough, but there are other consequences from this action that will affect your financial health.
The IRS will notify anyone who gives you money, such as employers or banks.
Most of us don't want that kind of embarrassment.
The levy will be part of your credit report, so your ability to get loans and credit later will be severely limited.
Needless to say, once you understand this process of the tax levy, you'll want to either pay your taxes or keep in very close touch with the IRS when a problem arises.
Maybe they're so traumatized at the thought of having to deal with the IRS that they'd rather not delve too deeply.
However, it's important to understand what happens when you don't pay your Federal taxes.
You may be surprised to learn that if you are delinquent on your Federal tax payments, the IRS can institute a tax levy on your property.
Some have heard of a tax lien and think that a lien and a levy are the same thing, They're not, and the difference is important.
With a lien, the IRS legally puts a hold on your home or other property as security for the debt.
With a levy, it confiscates that property and sells it to pay the debt.
The property can be real estate, but it can also be bank accounts, 401K's, wages, social security, federal payments, or state tax refunds.
Any source of funds that can be seized to pay the back taxes is taken.
A legal process is necessary for this levy to be put into play.
First you must receive a notice that there are back taxes due.
When you ignore that notice and don't pay, there's a final notice hand delivered or left at your home that says you're entitled to a hearing.
If you don't reply, the levy process is begun.
Loss of your home or other resources is devastating enough, but there are other consequences from this action that will affect your financial health.
The IRS will notify anyone who gives you money, such as employers or banks.
Most of us don't want that kind of embarrassment.
The levy will be part of your credit report, so your ability to get loans and credit later will be severely limited.
Needless to say, once you understand this process of the tax levy, you'll want to either pay your taxes or keep in very close touch with the IRS when a problem arises.
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