Can Your License Be Suspended for Tax Debt?

If you’re deep in tax debt, there will be consequences, and they won’t be pretty. But can your license be suspended for tax debt?

Can Your License Be Suspended for Tax Debt?

First, there’s the interest that piles up. That interest can vary depending on whether a tax return has been filed. Either way, it’ll add up.

Then, there’s the IRS’s collection efforts. Unpaid back tax debt can invite an IRS audit that’ll put you through countless loops as government agents sift through your personal or business financial records from years past.

Then, there’s the psychological impact unpaid tax debt brings. Your friends may be planning trips and buying new gizmos and gadgets. Meanwhile, you’ll be stuck in neutral, unable to move forward financially because of all the unpaid tax debt.

But unpaid IRS tax debt can also get you stuck in neutral in your professional life.

How Tax Debt Affects Your Professional Life

Unpaid IRS back tax debt led to the suspension of Oregon lawyer John Kolego’s law license for three months. This was due to a tax delinquency that surged to almost $400,000.

How did he amass so much tax debt? He didn’t deduct federal taxes from his employees’ paychecks, never paid his employees’ taxes to the government, and just didn’t file any tax returns several times for 16 years in the 1990’s and 2000s.

The total damage: $387,908 in unpaid IRS back tax debt, associated costs, and resulting penalties. That was enough for the Oregon State Bar to notice, and to likely suspend his law license as his conduct related to moral turpitude.

While the ability to practice law in Oregon may be affected by unpaid IRS back tax debt, it can also affect your ability to drive on the other side of the country.

Nearly 9,000 tax debtors in the state of New York had their driving licenses suspended because they owed the state more than $10,000 in back tax debt.

 

License Type Suspendible?
Law License Yes
Driver’s License Yes
Other Professional Licenses Depends

 

If anything can send a message that unpaid back tax debt must be paid, it’ll be a driver’s license suspension. When the state sent out 17,700 back tax suspension notifications, 6,500 people contacted the state to pay up or set up a back tax payment program. The resulting collections totaled more than $56 million, with 8,900 people continuing to shirk the tax debt and drive without a license.

Don’t Get Your License Suspended for Unpaid Taxes

It’s easy to avoid a tax bill, but it’s hard to live without a professional license or suspended driver’s license. The good news is they’re both consequences that can be avoided by paying your back tax debt.

If unpaid back tax debt is affecting more than your wallet, contact us to see how we can get you back on solid financial footing.

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