Decoding Lien, Levy, & Garnishments – IRS Tax Collection Strategies

It is common knowledge that the Internal Revenue Service is tasked with collecting taxes from all individuals and businesses in order to fund the government’s operation. When taxpayers fail to pay taxes or pay their debts, the IRS uses various collection strategies to get the money back. Now, Lien, Levy, and Garnishments are the strategies used for collection. 

In Colorado, Individuals must not ignore these topics because they are essential for both individuals and businesses when they have to navigate the complex world of tax collection to avoid any financial problems later on. When you see any of these words in your inbox, make sure that you get help from tax professionals in Denver, CO, in order to take proper action. These might just be strategies, but they have a lot of repercussions when they are not followed properly. 

Understanding The Various IRS Strategies

To recover unpaid taxes, the Internal Revenue Service (IRS) uses a variety of tactics, understanding these may be useful for the taxpayers in avoiding possible IRS actions. Let us deep dive into what they are and how they work. 

Tax Liens 

A tax lien is basically the government’s legal claim on your property in the possibility that you ignore or default on a tax bill is known to be a classic tax collection method. 

How it functions

Notice of Federal Tax Lien is given to you. The IRS notifies you of the government’s legal claim to your property by filing a public document. None of this process will be hidden from you, you will be kept in the loop via multiple reminders and notices from the government. 

What The Impact Is

Liens have an impact on your credit score, which can make it harder to obtain credit and cause issues when trying to sell real estate. This is one of many disadvantages you might have to suffer if you are not regular with the payments.

Release

After you have fully settled your tax due, liens are normally lifted within 30 days of the settlement. It is very important to settle the due on time, or else there might be heavy repercussions on you. 

Tax Levy 

A levy is the official process of taking your belongings in order to pay off a tax debt. It can be by belongings according to the unpaid due value. 

What Are The Different kinds of levies? 

Levies on bank accounts 

wage taxes 

Seizures of property (such as vehicles or real estate) 

What is The Procedure?

Before acting, the IRS will issue a “Final Notice of Intent to Levy” and wait 30 days for you to take action and pay off the money you owe them. 

Levies have the potential to seriously damage your finances, possibly denying you access to money or possessions even in the long term. It can be loans or a better credit score. 

Wage Garnishments

A wage garnishment is a levy in which the IRS communicates with your employer to send a certain amount from your paycheck directly to the IRS. The IRS determines the amount of your wages that is exempt from garnishment based on your filing status and dependents. 

The amount that can be garnished is limited by law to ensure that you have enough money for necessities. The garnishment process lasts until the debt is paid in full or an agreement is reached with the IRS.

What is The Prevention and Resolution From The IRS?

1. Speak with the IRS: If you are unable to pay, get in touch with the IRS to go over your options. 
2. Payment arrangements: If you are unable to pay in full right away, the IRS provides a number of different payment plans. 
3. Offer in Compromise: The IRS may occasionally accept a lower sum than what is owed. 
4. Expert assistance: Take into account employing a tax expert to bargain with the IRS on your behalf.

Understanding these collection methods can help taxpayers take immediate steps to resolve tax debts and avoid severe financial consequences. Getting expert help in these situations can help you find a feasible solution without having to face severe consequences.