Five Reasons You Need To Pay Your IRS Back Tax Debt
From Prison to Better Finances, Reasons Abound
If you find yourself in debt to the IRS because of back taxes, you might debate what to do and whether you should even pay it. Depending on your financial situation, the decision may be easier said than done. The time will eventually come when you’ll have to either confront or avoid your IRS back tax debt.
Regardless, there are multiple reasons why your IRS back tax debt should be paid. From getting your finances in order, to avoiding massive penalties, or even prison time, the reasons to pay back tax debt are too important to avoid. Here’s are a few reasons why you should pay Uncle Sam.
The IRS is the World’s Fiercest Creditor
First, avoiding paying your back tax debt to the IRS is probably one of the worst financial decisions anybody can make. The IRS has far-reaching power to collect back tax debt from those who don’t pay it. If it comes down to it, they can send back tax debtors to jail and impose serious fines that can set you back years financially.
In short, the IRS always gets its money. The IRS takes priority over mortgage lenders, banks, and student loan lenders, so it will do what it needs to do to collect tax debt.
Wage Garnishments and Levies
Another reason to pay your back tax debt is because an IRS wage garnishment or bank levy could be your new unwanted friend.
An IRS wage garnishment hinders your financial freedom by taking your wages before you have a chance to enjoy them for yourself. If you are subjected to a wage garnishment, you’ll essentially be working for a reduced salary, with some of your hard-earned money going to the feds instead of being used to support your family.
The IRS can also institute a bank levy against you as well. That simply means the IRS takes control of your bank account, and seizes a huge chunk of your savings. Paying your back tax debt will help you avoid this unwanted hassle.
Penalties and Interest
Not paying back tax debt to the IRS can lead to bigger issues down the line. Among them are the big penalties and interest you’ll have to pay on top of the original tax debt.
Interest on back tax debt is compounded daily, and builds up until the entire tax debt is paid. It’s the federal short-term rate plus three percent. IRS penalties can be five percent each month for those who owe, but don’t file.
Taken together, these added costs can make a bad situation worse. Avoiding these extra financial hits is reason enough to pay your back tax debt.
It Helps Get Your Finances in Order
Typically, where there’s back tax debt, there’s a messy financial situation. That’s why getting your finances in order is a big reason why back tax debt should be paid.
Getting on sound financial footing will also enable you to do what financially needs to be done. This includes saving for retirement, paying off other debts, and providing for yourself and your family. If back tax debt is in between you and financial freedom, it should get paid.
You’ll Eventually Get Found
There’s no way else to say it: the IRS always gets its money. It’s collection efforts are sure to recoup any debt, its agents are skilled at following all necessary procedures to collect, and it has the power to put people in jail or impose massive fines if people don’t pay.
The IRS is also getting ahead of the technological curve. Its computer systems make it easier to find tax debtors, and those who fail to report income to the IRS. In short, it’s only a matter of time until the IRS will find you – and your back tax debt.
Are you facing any of these IRS hurdles? StopIRSDebt.com can help you get back on your financial footing, and work with the IRS. Contact us today!