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Guiding You Through The Legal Process

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What happens if a tax bill goes unpaid

On Behalf of | May 8, 2019 | Income Taxes

Taxpayers in Georgia and anywhere else who don’t pay their federal income taxes on time could be subject to IRS collection activities. The first step in the process is to send a letter detailing how much the government thinks is owed. Typically, the balance will include penalties and interest in addition to the principal balance. The next step in the process may be to file a lien, garnish wages or seize other assets to satisfy the debt.

In some cases, the government will garnish future tax refunds until a previously unpaid balance is repaid. State income tax refunds may also be garnished. While the government has many different ways to collect what it is owed, there are ways to keep the IRS at bay. Taxpayers can ask to enter into an installment agreement that allows them to pay what they owe in monthly installments.

In the event that paying a tax bill could cause a financial hardship, the IRS may decide to hold off on collecting the debt. Those who claim a hardship should be ready to prove that this is the case. In the meantime, penalties and interest may still accrue, and a federal lien may be granted to warn other creditors of the tax debt owed. Ideally, individuals should pay what they can now to avoid as much interest as possible.

Individuals who are having trouble paying taxes have several options for dealing with the IRS. For instance, it might be possible to ask for an installment deal or ask that the debt be forgiven. An attorney may help an individual pursue these and other options that are available. In some cases, the IRS may agree to waive penalties or other fees to make it easier to pay the principal balance.