An IRS problem is just like a toothache. Nobody wants to have one and even a slight one hurts far too much. Unfortunately, they are becoming increasingly more common. One of the most common things that often leads up to trouble with the Internal Revenue Service is completely avoidable if it weren’t for fear and procrastination.
The trouble comes from people who do not file a tax return. In far too many cases the trouble gets worse because people are not just failing to file one tax return, but they are failing to file tax returns for multiple years. This is a completely avoidable IRS problem because not filing a tax return or several years is trouble created by the individual filer and not the Internal Revenue Service. It is easy enough already to get into trouble with the federal tax collector, so someone should not give the IRS a free swipe at them by doing something that is truly avoidable.
Failure to file a federal tax return or as mentioned before, failure to file several federal tax returns becomes an IRS problem because the tax code allows the Internal Revenue Service to file a substitute tax return for the person who did not file one. That substitute tax filing by the Internal Revenue Service leads to all sorts of trouble that just doesn’t need to happen if someone will simply file their return. The substitute filing frequently leads to owing money that someone might not ordinarily owe. The ensuing trouble that follows often leads to the person who did not file their tax return receiving a wage garnishment on their paycheck or a bank levy on their bank account. In both of those cases, the IRS takes money from the person. It is possible to get a release of the wage garnishment and bank levy after it happens, but rarely will the person ever get any of their money back that the Internal Revenue Service took through the collection action.
The other IRS problem that can follow from a person not filing a federal tax return or several federal tax returns is the ugly, painful and damaging federal tax lien. The ugly part about the federal tax lien is that it can get issued at any point in the collection process and the notice of lien comes after the lien is issued. The painful part about the federal tax lien is that by having one, a person’s property or assets can not be sold or moved by the person while the lien is in place. The damaging part about the federal tax lien is that is can really hurt a person’s credit rating.
The wage garnishment, bank levy and federal tax lien are difficulties all by themselves, so a person doesn’t want to invite them by not filing a return. They only compound the original IRS problem that the person has with the Internal Revenue Service. The garnishment, levy and lien all come out of the collection process which is a common activity at the Internal Revenue Service. However; it is an avoidable activity in this scenario because they would never happen if a person just makes sure they file their returns each year.