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What Actions Can The Irs Take To Collect On A Tax Debt They Claim You Owe?

Tax can be defined as a compulsory financial charge or levy imposed on a taxpayer, either an individual or a legal entity by the government in order to fund its activities. Taxes are backed up and implemented by law. Hence, the evasion or resistance to paying tax is an offense punishable by law.

The payment of taxes is paramount because most governments rely on revenue from taxes to run the country, carry out capital projects, and implement its other functions.


Individuals and entities are generally resistant to taxes because they believe that paying taxes is unnecessary. However, the truth is paying taxes is like making a small contribution to a better society. For example, in the United States of America, taxes are used by the government to finance Medicare, to pay social security recipients, and other government welfare and retirement projects. These projects contribute to the overall welfare of citizens in society, in one way or another.

The Internal Revenue Services (IRS) is charged with the administration, collection of taxes in the United States of America. They are also in charge of enacting tax laws that are made by the congress. The three main functions of the IRS are tax return processing, taxpayer services, and enforcement.


  1. The IRS can get access to your financial information.

Have you ever wondered if the IRS has the power to request for a copy of your financial information or history? The answer is Yes. The IRS is legally allowed to request a copy of an individual or entity’s financial information in order to ensure tax compliance and collect taxes. However, the IRS usually sends an official letter or notice to the parties involved before accessing their information.

  1. The IRS can file a notice of federal tax lien.

If you have ever wondered whether the government through the IRS can seize your property, the answer is yes. The IRS can issue or file a notice of federal tax lien. A federal tax lien is a claim against your property, including property that is acquired after the lien has been filed. The notice is an indication of interest on your property by the government as a creditor to you. For example, in bankruptcy proceedings, the government can file a federal tax lien to notify other creditors of its interest in the property. Sometimes, a federal tax lien can affect your credit score or rating and can also appear on your credit report and reduce your chances of getting credit or loan. Once a federal tax lien is issued by the IRS, all taxes and interests, penalties, and recording fees must be paid before a “certificate of release of federal tax lien” can be issued.  Otherwise, it loses its legal claim to collect the taxes.

  1. The IRS can serve a notice of levy.

By issuing a notice of levy, the IRS is allowed to confiscate your property in order to satisfy a debt liability. Common properties that are usually confiscated in this case are cars, boats, houses, etc. They can also levy your bank account, retirement income to set off the tax debt. Another common practice by the IRS is to set off future tax refunds that are due to you, to pay off previous tax debts owed by you. Sometimes, when you owe state income taxes, they may also be added to your federal tax debt.

  1. The IRS can enforce restrictions on your passport.

The IRS is legally allowed and capable of restricting a taxpayer’s passport if they owe a huge amount of tax debt. For example, if a taxpayer owes a huge amount of tax debt and has made no effort in payment, does not have an understanding with the IRS on how to offset the debt, then the IRS can issue and certify that the taxpayer has a serious delinquent and negligent tax debt. This will, in turn, enable the state department to put international travel restrictions on the taxpayer. This may include revoking the taxpayer’s passports or refusing to renew them.

  1. The IRS can sell off your property.

This rarely occurs, except it is certified that the taxpayer is unable to afford the payment of the tax debt. The IRS can then make a claim of your property and sell it off. Once a property is seized, it cannot be reclaimed as it is immediately sold off at an auction so the revenue generated from the sale can be used to set- off the amount owed. The IRS usually would only seize and sell off assets that are not essential to the survival of the taxpayer. For example, the IRS would not seize a taxpayer’s primary home or shelter and render their families homeless. However, they can take possession of vacation homes, jewelry, boats, yachts, savings accounts, and life insurance policies. They are most likely to select assets that can be easily liquidated to cash to offset the debt.

  1. The IRS can garnish your wage and salary.

Wage garnishment is another action the IRS can take in order to collect and recover taxes from a taxpayer. Wage garnishment occurs when a court gives an order to your employer to withhold a percentage or amount of your wages and directly send it to a creditor. In this case, since the IRS is a government agency and the creditor does not need a court order to garnish your wages. The IRS can directly reach out to your employer and simply begin to garnish your wages. The IRS is even allowed to take a higher percentage of the wages than other creditors would normally take. The garnishment will continue as long as you still owe the IRS, after which your wages will be released.

If a taxpayer is unemployed or quits their job, the IRS can also garnish other forms of income like social security benefits, unemployment benefits, and other compensation benefits. However, the IRS cannot lay claim to money received from social security disability services.


Tax is an unavoidable levy that must be paid by anyone eligible. Hence, tax avoidance or evasion is a crime punishable by the law. If you can afford to pay taxes, it is important to pay the correct amount as at when due to avoid any of these actions being taken against you.

However, if you are truly unable to furnish your tax debt, it is important to speak to a tax expert to get quality and professional advice on the next course of action.

In peculiar cases like bankruptcy, the taxpayer and the IRS can find a middle ground and work on a payment schedule that will be convenient and feasible for the taxpayer and the taxpayer may even be discharged (depending on the situation). It is not advisable to avoid notices from the IRS even if you cannot pay. Refusing to acknowledge a notice from the tax authority only deprives you of your right to contest a tax bill.

Finally, every taxpayer has rights and these rights must be protected even in the enforcement of the tax. The IRS is not allowed to infringe on taxpayers’ rights in the course of executing their duties.

Here are some reasons as to why you may owe Taxes to help you understand as to how owing the IRS can come about should you find yourself in this predicament.

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