Have you ever known someone who gets bills or notices in the mail and make paper airplanes that touch down in the trash can? Well unfortunately, we have taken on many clients that have mastered that art form. They come to us and depend on us to bail them out of the consequences that follow from making paper planes of IRS notices. I have found that there are several consequences that lead to increased tax debt. Let me share some of those consequences.
- The first consequence of ignoring the problem is, increased penalties and fees tacked onto the original debt.
- The second consequence is the activation of the Automated Collection System (ACS). This system is activated in response to clients not responding to several notices sent from the IRS. ACS can freeze your assets, garnish your wages and, put liens on your home.
- Another consequence is mounting penalties and interest.
The IRS charge a penalty of 0.5 percent/month on your unpaid balance.
The IRS have the power to double that penalty if they deem that they are being ignored.
The IRS charge interest of five percent annually on your outstanding tax balance.A new consequence in the works is losing passport privileges. The State Department can restrict your passport