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Jailtime and loss of property: Penalties for overdue taxes

The Internal Revenue Service (IRS) can impose harsh penalties for those who fail to pay their tax obligations. Stories of the government agency sending people to jail and taking away property abound. But when can the government use these extreme measures and are these severe penalties common? This piece will answer these questions.

How often does the IRS use these more severe penalties? There agency averages two cases per month throughout the country involving a taxpayer going to jail or losing their property to the IRS.

When can the IRS take a home or send a taxpayer to jail? Taxpayers who fail to pay or more importantly fail to discuss their case with the IRS or Revenue Officer when they receive correspondence from the IRS.

How does the government seize a taxpayer's home? When it comes to seizure of property, the IRS generally has two options. The first requires the agency to receive a court order. In the past, the agency could seize property in the same manner it could seize other assets. In 1998, lawmakers passed the Restructuring and Reform Act. This law included a safeguard to better ensure taxpayer's homes were protected. The safeguard is the requirement the agency receive a judge's approval prior to seizing a home.

The IRS' second option involves suing for foreclosure of a federal tax lien placed on the property. An IRS Revenue Officer will generally file a federal tax lien within 10 days of being assigned a collection case for a delinquent taxpayer, if a lien was not previously filed automatically. The IRS was successful in 58 of the 60 cases filed in 2017.

What options are available for taxpayers with tax debt? Do not ignore the debt. Taxpayers that fail to act can find themselves facing loss of their home or potential imprisonment. Options are available. The attorneys at Goldburd McCone can review your situation and discuss these options, helping you find the best possible resolution.

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