There may be many reasons why you might find yourself in a "delinquent" tax situation. Maybe you were making tax payments and then lost your job, or had an unexpected crisis or medical emergency. It could be that you filed late and excessive interest fees have been added on. What happens when the IRS begins collection activity on your delinquent taxes?
If you fail to pay your delinquent taxes, the IRS may file a federal tax lien against any property you own. The tax lien can be filed against a home, a car and even against any future rights you might have to property. This means that you may not be able to sell that property or purchase new property, including getting a new mortgage, until the lien has been settled.
The IRS may also levy (or seize) property and sell it for taxes owed. This property may include a home, car, wages, bank account or Social Security income. Garnishing wages is often one of the first collection steps that the IRS will take if you have ignored their notices to pay your tax debt. Before these actions are taken, you should have received a "Final Notice of Intent to Levy and Notice of Your Right to a Hearing" 30 days prior to the seizure.
These actions can have a great impact on your life. There are ways to overcome a tax delinquency. First, the IRS will often work with you and set up a payment arrangement. You may also be able to have some or all of the debt offset, especially if you believe some of the tax debt is in error. There is also an expiration date for tax collection efforts to cease. Many people are not aware of this. The collection statute expiration date is 10 years after the tax assessment date.
If you are being harassed by the IRS and are not sure what to do, a tax attorney can help you. They may be able to file an appeal on your behalf, help you get the debt reduced, or provide you with other options to avoid having your wages garnished or your property seized.
Source: USA.gov, "After You've Filed Your Federal Taxes," accessed Nov. 22, 2016