5 Scary Things the IRS Can Do If You Owe Tax Debt

LISTEN UP, TAXPAYERS! If you owe the IRS money, you're playing with fire. The IRS has some serious weapons in its arsenal, and if you don't pay up, they won't hesitate to use them. Let's dive into the five scariest things the IRS can do if you owe tax debt.

1. LEVY ON YOUR ASSETS! The IRS can issue a notice of levy on your salary, bank accounts, or even your property. This means they can legally seize your assets to satisfy your tax debt. Imagine waking up one morning to find your bank account emptied or your paycheck slashed in half. That's the power of an IRS levy! You need to pay your taxes on time, or the IRS will come knocking, and you won't like what happens next.

2. TRUST FUND RECOVERY PENALTY! If you're a business owner or manager, watch out for the trust fund recovery penalty. The IRS can assess this penalty for certain unpaid employment taxes, and it can be up to 100% of the unpaid taxes. This penalty is imposed on responsible persons, so if you're in charge, you're on the hook. This can be a devastating blow to your business, so make sure you're paying your employment taxes on time.

3. SUMMONS! The IRS can issue a summons to you or third parties to secure information to prepare unfiled tax returns or determine your ability to pay. This means the IRS can dig into your financial records, and if you're not compliant, you could face additional penalties and interest. A summons is a serious matter, so don't ignore it. The IRS is coming for you, and you need to be prepared.

4. FEDERAL PAYMENT LEVY PROGRAM (FPLP)! Certain federal payments, such as vendor payments, OPM, SSA, federal salary, and federal employee travel, may be subject to a levy through the Federal Payment Levy Program. This means the IRS can seize your federal payments to satisfy your tax debt. If you rely on federal payments, this can be a devastating blow to your financial stability. The IRS is coming for your money, and you need to be ready.

5. PASSPORT REVOCATION OR DENIAL! In cases of certain unpaid taxes, the IRS can revoke or deny your passport. This can impact your ability to travel internationally, which may have financial implications, especially for those who rely on international travel for business or personal reasons. The IRS is serious about collecting tax debt, and they won't hesitate to use this powerful tool to get what they're owed.



So, what can you do to avoid these scary consequences? First, file your tax return on time, even if you can't pay the full amount. Filing on time avoids the late filing penalty, which is usually 5% per month on the unpaid balance. Second, pay as much as you can on or before the due date. This will help reduce the amount of interest and late payment penalty that will be added to any payments made after the due date. Third, if you can't pay your full balance, consider applying for a payment plan. The IRS offers short-term and long-term payment plans, as well as offers in compromise, to help taxpayers manage their tax debt.

Remember, the IRS is not your enemy. They're there to help you manage your tax obligations and avoid these scary consequences. So, don't ignore your tax debt. Take action now, and you can avoid the wrath of the IRS.