August 28, 2020
Owing back taxes to the IRS or any State Department or Department of Revenue can result in a plethora of unwanted penalties. Those who avoid paying and owe large amounts may even have their personal property, including their homes, boats, cars, SUVs, and even their bank accounts seized in order to pay those debts. State Department of Revenue may go one step further. In certain states, such as New York, or Louisiana, the Department of Revenue commonly seizes the driver’s licenses of taxpayers who owe past taxes, preventing them from renewing their licenses. Or suspending their licenses outright, so driving is no longer an option. In addition, if an extremely delinquent tax debt is sent to the State Department of the Federal Government, your passport may also be seized or deemed non-renewable as well. With this, you will be unable to legally travel outside the country. Thankfully, there are some options available to you before things get to this point.
Falling Behind on Your Taxes
There are many reasons why people fall behind on their taxes. For example, someone who freelances for a living or is considered an independent contractor by their employer may not be putting away a portion of their income to pay taxes or may fail to make quarterly tax payments. There are also people and businesses who simply do not have the money they owe to the IRS, and rather than agree to a proactive payment plan, they simply avoid their letters until an IRS agent appears at their door.
The IRS does not look kindly upon those who fail to pay their taxes, regardless of the reason, situation, or extenuating circumstances. They will send out a series of letters informing you of what you owe, giving you ample chances to appeal the amounts owed, and providing the opportunity to have your taxes audited to identify if any mistakes were made. Actively communicating with the IRS, preferably through a professional tax accountant, is the best way to avoid having the IRS take the next steps and begin collection efforts.
Types of Collection Action
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Suspending Driver’s Licenses – In addition to seizing personal property, the IRS can and will suspend your driver’s license. This is within their rights, depending on the state in which you reside. They may take steps so that your driver’s license cannot be renewed, or they may suspend it altogether, so you are no longer legally allowed to drive. Your license may be returned to you upon the settlement of your debt.
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Seizing Passports – The IRS has authorized the State Department to seize or suspend the passports of any taxpayers who owe them money. As a result, these individuals cannot travel outside of the country and may be apprehended at customs if trying to get into the United States from another country. Likewise, a passport cannot be renewed if it suspended by the IRS.
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Suspending Professional Licenses – Finally, the IRS can suspend any professional licenses that you currently hold if you owe them money. Examples include nursing or physician’s licenses, as well as any that pertain to the work that you do. If this happens, you will no longer be allowed to practice and may lose your job or be suspended without pay. Once you arrange for a payment plan with the IRS or pay off your debt entirely, you can petition them to return your professional license.
The IRS will do everything that it can in order to collect on the back taxes that you owe.
How to Get Ahead of the Problem
Before any of these unwanted penalties are levied, the IRS will take a number of steps to inform you that you have a debt to pay. It can take weeks, if not months, of warnings and chances to appeal the IRS’ decision before they begin seizing your property and garnishing your paychecks and bank accounts. Do not let any of these chances to appeal and set up a payment plan slip by.
For example, the IRS will send out a series of notices, informing you of your debt before they reach the point of seizing your license. There are several swift, actionable steps they will take. You’ll receive a written notice for each one, and you will have a specified time period in which to appeal their findings or set up a payment plan in order to take care of the debt before it reaches a critical stage. It is important to follow through and stay in continuous communication with the IRS during this part of the process.
Additionally, the IRS may send an agent to your door or request an audit of your finances before determining just how much you owe them. An IRS agent will not show up unannounced and will always have several forms of ID on them to prove their identity. Before this happens though, a written notice will arrive via U.S. mail, so you have adequate time to gather the all the proper documentation they have requested. You will never receive a phone call or an email from the IRS stating that you owe them a debt. If you do, this is likely fraudulent activity.
Be Proactive and Get Help Today
If you owe back taxes and are worried about the IRS seizing your driver’s license, you still have available options. It is important that you speak with an expert tax accounting firm who has experience in IRS dealings in order to effectively communicate with them regarding the back taxes that you owe. Once you are in communication with the IRS through your professional tax representative, you can set up a payment plan or submit an offer to settle. No matter what stage you are in with the IRS as far as written notices are concerned, they will work with you in order to ensure that you clear your debt giving you a well needed fresh-start.
If you have tax-related questions about losing your driver’s license or have lost your license due to unpaid tax debt, the tax advisors at the Enterprise Consultants Group can answer your questions, discuss your rights, and provide actionable options. Please contact us online or at (800) 575-9284 today to schedule a free and confidential consultation to see how we can help you.
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