The IRS is known as the most ruthless and aggressive collection agency on the face of the planet, and a recent report may prompt it to up its game as billions in uncollected tax revenue remains outstanding.
A recent IRS report noted that nearly $7 billion taxes remain unpaid, encompassing nearly half a million tax returns.
But of that massive sum, almost $2 billion stemmed from tax payers not found by IRS agents because the IRS didn’t do its due diligence.
The IRS is known for doing their due diligence. Just ask some of the thousands of taxpayers every year who become subject to a bank levy, wage garnishment, or tax lien.
But the $1.9 billion that remains uncollected from those the IRS hasn’t found due to its incomplete efforts aren’t as good as gone. The IRS has ten years to collect back tax debt, and renegade tax debtors who try to hide from Uncle Sam can get a wage garnishment if they show in the IRS’s radar during that time.
The new report highlights the IRS’s efforts to track down tax debtors.
The IRS performs ten actions to hunt them down. They include tracing many types of records: court records, postal records, and a taxpayer’s records filed with a state’s motor vehicle department.
And if the tax debtor requires a public warning issued against them, the IRS will make it happen – most likely in a local, community newspaper.
If that’s you and you find your name in a newspaper’s public notice section, you’re most likely the subject of a tax lien. Tax liens are security interests against your property, and can be filed against your cars, business assets, or even your home.
Tax liens can also negatively impact your credit score, ruining your once promising creditworthiness for a period of seven years.
To get its hand on that nearly $7 billion in uncollected tax debt, the IRS will also probably make use of some wage garnishments. These are some of the most inconvenient tax collecting measures, as they take a chunk of your paycheck and redirect to the IRS’s coffers. The agency will seize 30 times the minimum hourly wage or a quarter of your paycheck.
If your back tax debt is manageable, better to make efforts to pay it now – like with an installment plan – rather than suffer the embarrassment of a wage garnishment.
And if it’s not too much trouble, the IRS will go through all the procedural notice requirements and institute a bank levy against your savings or checking account.
Bank levies work pretty simply. The IRS finds your financial accounts, and takes a part of what’s in there. If the IRS knows about your bank accounts, it’s likely that they know more about your finances than you’d like.
When it comes to collecting the nearly $6.9 billion in tax debt, the government may just use a wage garnishment, tax lien, or bank levy against some of these nearly half million tax debtors.
Sign up for our newsletter and be the first to find out when exciting IRS news happens. Yes, exciting. We're really into taxes.