Small Business Resource Guide 2002
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Home > Post-Filing Issues

Post Filing Issues

Actions the IRS May Take If You Do Not Pay Your Bill

The IRS wants to help businesses file and pay their taxes promptly and efficiently. However, in order to make the system fair for all taxpayers, the IRS must occasionally protect the government's interest when a taxpayer neglects to pay a tax bill. These actions may consist of:

  • Filing a Notice of Federal Tax Lien. If you receive a bill and fail to pay and do not appeal, a tax lien may be filed. A tax lien is a public document usually filed in a county courthouse or with a secretary of state. It can impair your company's ability to borrow funds and impact its ability to secure new business.
  • Issuing a Notice of Levy. If you receive a Notice of Intent to Levy and do not pay the balance due and do not appeal, a levy may be issued. Levies are notices to banks, customers, or any other entity that owes you money. The levy requires these entities to pay over funds to the IRS rather than to the business that owes the tax. The funds received by the IRS are applied to the taxes that are owed.
  • Seizure of Property. In egregious situations, the IRS may seize property that belongs to a business that owes taxes and willfully neglects to pay them. Vehicles, real estate, and equipment are examples of items that may be seized. The seized items may be sold at auction. Funds from the sale are then applied to the taxes that are owed.
  • The Trust Fund Recovery Penalty. If a business fails to pay over employment or excise taxes, the IRS may assess the Trust Fund Recovery Penalty against the persons responsible.

Each of the above actions comes with certain appeals rights. See Publication 594, The IRS Collection Process, and Publication 1, Your Rights as a Taxpayer for complete information.

 

Important References

Publication 594                  The IRS Collection Process
Publication 1                      Your Rights as a Taxpayer