If you`ve agreed to an Installment Agreement with the IRS to pay your tax debt but find yourself struggling to make the payments, it`s important to know the consequences of defaulting on your agreement.
Defaulting on an Installment Agreement means that you have failed to make your minimum monthly payment on time, or you have missed a payment altogether. When this happens, the IRS will send you a notice of default, which outlines the consequences of failing to make your payments.
Perhaps the most significant consequence of defaulting on an Installment Agreement is that the IRS may immediately begin collection activities, including levying bank accounts or wages. This means that they can take money directly out of your bank account or garnish your wages until the debt is paid.
Additionally, defaulting on an Installment Agreement may result in the IRS filing a Notice of Federal Tax Lien against any personal property you own. This includes real estate, vehicles, and any other valuable assets you may have.
But it`s not all bad news. If you default on your Installment Agreement due to circumstances beyond your control, such as a job loss or medical emergency, you may be eligible for a reinstatement of your agreement. This means that the IRS will work with you to establish a new payment plan that better fits your current financial situation.
It`s important to remember that the IRS is willing to work with you to resolve your tax debt, but you must communicate with them to avoid defaulting on your agreement. If you`re struggling to make your payments due to financial hardship, don`t wait for a default notice to arrive before reaching out to the IRS for help.
In conclusion, defaulting on an IRS Installment Agreement has serious consequences, including wage garnishment and asset seizure. However, if you communicate with the IRS and explain your situation, you may be able to establish a new payment plan that better fits your current financial situation. Stay proactive and stay in touch with the IRS to avoid defaulting on your Installment Agreement.