Jul 01, 2020
By Joel Kratzer, CPA Manager at Terry Lockridge & Dunn
The IRS has shown some benevolence during the COVID-19 pandemic, extending deadlines and allowing more time to comply with information requests. However, the end to this grace period is coming soon and you WILL be required to eventually pay your tax bill they say you owe.
Here is what the IRS can do to collect your unpaid tax bill:
File a Notice of Federal Tax Lien. A lien will attach to property such as your real estate, vehicles, or accounts receivable. The filing of a Notice of Federal Tax Lien puts the public on notice that the government has a claim against your property including property acquired after the date of the notice. Such a lien can harm your credit rating. A Release of Notice of Federal Tax Lien is issued only after your account is settled in full.
Serve a Notice of Levy. This allows the IRS to seize and sell your property to pay taxes which you did not pay voluntarily. Levies can be made on property you own such as real estate and vehicles. It also extends to property you own which is held by third parties, such as deposits in a bank.
Apply Overpayments. The IRS can offset any refunds that may be due to you against a prior tax liability still outstanding.
What you need to do. If you receive correspondence from the IRS, contact us immediately. You may not agree with their request for additional amounts due, but a prompt reply to let them know that you have received their notice may keep you from receiving more unpleasant notices.
Feel free to reach out to Joel at email@example.com, or your tax accountant at Terry Lockridge & Dunn. They can be reached at 319-364-2945 in Cedar Rapids, or 319-339-4884 in Iowa City.