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Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand. |
Like it or not, there is no escaping taxes and the government's reach Yet Another Reason Why it Doesn’t Pay to Ignore Unpaid Taxes By Britt Erica Tunick If you owe taxes this year, remember it’s wiser to pay them off quickly to avoid any trouble from the Internal Revenue Service (IRS). Ignoring your unpaid taxes for too long could result in having your assets and bank accounts seized by the government. Recently, the IRS was granted more power for handling delinquent tax bills, which now allows them to seize passports. As part of the FAST Act Highway Transportation Bill recently signed into law by President Obama, as of January 2016 the IRS has the right to revoke the passport of anyone with unpaid taxes of $50,000 or more. And that doesn’t mean you have to owe $50,000 in unpaid taxes, but that the total you owe the IRS, including interest and penalty fees, is $50,000 or more. For the more than 12 million people that the IRS says already fit within this category, that means the IRS merely needs to e-mail their names to the State Department to have their passports cancelled. The new law also allows the IRS to outsource unpaid tax accounts to private debt collectors, meaning anyone who has made no effort to pay delinquent taxes for over a year should also expect to start getting calls from collection agencies. Even if you don’t plan on traveling abroad anytime soon and the prospect of being hunted by a collection agency isn’t that unsettling it is important to remember that the longer unpaid taxes are ignored the worse they will get. Taxes not paid by the due date typically incur a penalty of 0.5% of your total unpaid taxes for each month they are unpaid, but the penalty can be as high as 25% of your unpaid taxes. And don’t forget that the IRS’ powers reach far beyond cancelling passports. Unpaid taxes ignored for too long could result in the IRS going after any assets you have in many ways, from filing a tax lien against you, to garnishing your wages or bank accounts or even seizing and selling your home or business. |
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