The Internal Revenue Service Can Take A Whole Lot More Than Just Your Wages – IRS Garnishment
We keep hearing about the Bush-era tax cuts and what it will mean to tax payers come December 31st, 2010. The lame duck session of Congress started on November 15th and the number one issue that needs to be figured out is what to do about all the tax cuts that are set to expire the end of this year. And, that means the IRS cannot even publish this year’s 1040 form until such time as Congress has decided what it will do.
Most people are familiar with the fact that the government can garnish wages or salaries. A notice is sent to your employer and money is taken directly out of your paycheck. But that’s not the only way that the IRS can get your money.
It’s not an easy matter. The U.S. is further in debt than ever before and these taxes, if raised, would help to stem the outflow of money. But, the U.S. economy, and namely the middle class, cannot afford to have their taxes raised. It would mean a further reduction in spending and most likely the collapse of the housing market, which is already in a shambles.
But they might take more than just the interest and dividends. The IRS can take your bank accounts, brokerage accounts, and even the cash loan value of your life insurance if it wants to. And, by the way, that includes your retirement accounts. No financial account is safe.
This is the worst-case scenario: * Estate taxes would go up to 55% with only $1 million being exempt from taxation. Starting in 2001, the estate taxes went down, ending at zero, nada, zilch in 2010. That led to people hoping that rich Grandma or Grandpa would die in 2010, because the lucky heirs could keep the whole enchilada and not pay a dime of taxes to Uncle Sam. People used to think it was funny, back in 2001, but it’s not so funny now. You can even picture the more unscrupulous wanting to discontinue life-support on rich relatives who probably won’t live much past December 31st anyway. On a multi-million dollar estate there is a lot of money at risk.
Physical and real property can be taken too. The IRS can put a lien, which is a legal claim, on physical property and real estate. This includes cars, boats, and even your house. Once a tax lien is put on your home you have to satisfy the lien before you can sell or even refinance. The levy can also affect your credit rating and make it difficult for you to get credit in the future.
This may be one of the most important topics of them all. Find a good bookkeeper, the account is going use a bookkeeper and then charge you for it. This way you can stay a step ahead of the accountant and save yourself some money.
I’ve used accountants and Tax lawyers and they both were valuable tools for me during the stressful tax seasons of my past. During building a business it can be difficult enough without worrying about filing and keeping up with paper work this is the last thing you need to worry about. Once again keep in mind that I’m not an accountant or tax lawyer only a person who has felt the crouch of tax season before, an if this helps you even a little then that’s great! Good Luck and God Bless!
Harris Smith is a personal finance writer interested in home equity line of credit Don’t Miss Out!
