Approximately 27 million Americans owe past due taxes. The population of the United States is around 330 million, with 245.3 million of those people being adults. In 2017 just over 143 million Americans were taxpayers. Stated another way, roughly 1 in every 6 American taxpayers owes money to the IRS. If you live in an urban or suburban neighborhood, like I do, every time you walk down your own street you pass by 4 houses whose occupants are in collections with the IRS and maybe you’re one of them.
As a result of COVID-19 the number of Americans in trouble with the IRS for past due taxes is set to increase. Businesses and individuals left strapped for cash due to COVID closures and struggling to make ends meet will likely forego quarterly tax payments. Many who assume their reduced operating revenue equates to reduced taxable income will be in for a rude shock when they discover forgiven Paycheck Protection Loans are considered taxable income by the IRS.
While the days of IRS agents seizing business property, equipment and any other assets they can get are long gone, taxes must be paid and the IRS has collection means unavailable to other creditors. For example: most creditors cannot touch money saved in retirement accounts such as IRAs and 401[k] accounts, but the IRS can and will levy those accounts.
Fortunately, there are ways to alleviate those past due income taxes. Payment plans can be worked out so that the tax debt no longer shows up on credit as one lump sum due. Many taxpayers will be eligible for some form of relief on past due taxes due to lockdown induced reductions in income. Now is the time to consult an attorney [such as myself] who specializes in Tax Resolution.
If you or someone you know has received a notice from the IRS contact me at 312 577-9405, or David@RatowitzLawGroup.com.