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What Happens If You Can’t Pay?

One of the most fundamental parts of running a business or simply earning a living is paying taxes. It’s painful, yes, but it’s also a fact of life. While it is possible to lower your tax burden in some circumstances, sometimes you may end up in a situation where you can’t afford to pay your taxes. 

Ideally, you will avoid this situation entirely. By keeping a close eye on your finances and being sure to file your taxes earlier rather than later, you can usually keep ahead of it. Remember that failing to file your taxes can be far worse than failing to pay your taxes. So even if you know that you won’t be able to pay your taxes, be sure to file them. You simply can’t hide from the IRS.

Late or unpaid taxes are bad enough, however. Like any debt, the interest rate and money owed can ramp up over time. So, the longer you delay paying your taxes, the worse your fees will become. Eventually, the IRS may file a bank levy.

A bank levy is a legal seizure of your property to settle your tax debt. Generally, this will be achieved by taking money directly from your bank account. Before they take this property, you will be notified, which gives you a short time to act. If you let it go too far, the IRS may even file charges against you for tax evasion and revoke your passport. 

What to Do In This Situation

The trick to dealing with your taxes is to act fast before things get too difficult and too expensive. For example, if you reach the point of receiving a bank levy notice, you can still act before the money is removed from your account. You should first get a copy of the notice from your bank, so you know how long you have. Then, see if you can arrange an IRS bank levy release as quickly as possible. 

Rather than trying to hide from the IRS, keep the lines of communication open. Tell them what’s going on and demonstrate a willingness to work with them to resolve this issue. If they request information, you are likely better off providing what they need. Hopefully, you may be able to reduce what you owe or arrange a payment plan that you can afford. 

If you regularly have issues with filing or paying your taxes on time, it may be wise to consult an accountant specializing in taxes. This could be a generalized tax accountant or one who can provide tailored advice for your situation - for example, if you are required to submit a non resident tax return canada, it might be best to seek the help of a professional well-versed in this area. An accountant will be able to file your taxes correctly and punctually, and they may even be able to optimize your taxes. While the expense of hiring an accountant might put you off, they could save you money in the long run, especially if you are running a business that requires a more complicated tax return. If nothing else, hiring a professional will make you feel far less stressed and uncertain about filing your taxes in the future.