Penalties for not paying back taxes accrue along with interest. Most of the time the penalties for late filing and late payment stop when the 25% threshold of the taxes due amount is reached. The interest continues. There is no statue of limitations that will protect you. So if you owed $2000 in 2000 the interest and penalties will amount to over $6000 in 2004.
If you get a back tax notice from the IRS or a state agency and it mentions the words "seizure" or "levy, call a tax professional fast for help. The IRS or that state agency that mentions the words "seizure" or "levy has the power to seize your bank account, you assets, everything you own and put you on the street.
Unpaid back taxes need to be attend to immediately. The consequences only get worst if neglected or ignored. The penalties and interest can mushroom into an unmanageable size quickly.
You've heard of famous celebrities loosing all they had to the tax man because of not attending to their financial responsibilities. The I.R.S. unpaid back taxes demand letters are not to taken lightly,.
The I.R.S. reviews all W2's and 1099's that are issued to you in your name. If the amount is greater than the sum of a standard deduction and one personal exemption the IRS will look to see if taxes were withheld.
If you owe money, the usual course of action is that the IRS will send out a series of collection notices with a CP designation - CP 501, CP 502, CP 503 and finally CP 540.
If you don't pay or make arrangements to pay, and other attempts to collect the money fail, one option available to the IRS is to file a Notice of Federal Tax Lien. The lien gives the IRS a legal claim to your property as security or payment for your tax debt.
The last notice reads in bold type "Urgent, Notice of Intent to Levy" at which point you have 30 days to get in touch with the IRS to work out a deal before they seize your assets, bank accounts, paychecks and any accounts receivable.
IRS Back Taxes, Tax Negotiators nearly 58 million taxable households are outside of the income tax system and pay no taxes.
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