Tax Evasion: What You Need to Know - Can The IRS Garnish Social Security?

Maybe it started innocently and you had no idea that you were at risk of facing fraud with the IRS. Maybe you forgot to pay taxes for one year and then that one year turned into several years. Now that much time has passed the fees and penalties are adding up and you cannot afford to pay the IRS what you owe. Chances are that you are aware that you are most likely facing an IRS audit. You may need the services of an experienced tax debt relief firm.

The IRS targets taxpayers who:

  • Fail to file their tax returns – Failing to file your tax returns can land you in jail for up to one year for every year that you failed to file your taxes.
  • Misrepresent income and credits in their tax returns – Any action that you take to evade tax can land you in jail for up to 5 years.
  • Help others evade taxes – Helping others evade from paying their taxes carries a jail term of three to five years depending on the actions alleged. 

What penalties will I face for Tax evasion?

There are various penalties and consequences for evading tax. Some of them include:

  • Paying a penalty- If you are found to have knowingly avoided paying taxes, you can be fined up to a maximum of $250,000.
  • Pay Interest – The law requires the IRS to charge interest if you fail to pay taxes on time.The interest starts accumulating from the due date of filing your returns until you pay in full what you owe the government, including the cost of the penalty charges and accrued interests.
  • Lose Your Social Security Benefits – If you fail to pay the IRS what you owe, including interest and penalties, the IRS will use the Federal Payment Levy Program to deduct 15 percent of your social security benefits every month until your debt is paid in full.
  • Tax Charge on Your Property – You will automatically face a federal tax lien if you fail to pay your taxes in full within a period of 10 days after an IRS tax assessment. The IRS may also decide to file a Notice of Federal Tax Lien in public records which will alert your creditors that the IRS is claiming all your property, including any property that you may acquire after the Notice of Federal Tax Lien. The IRS won’t release the lien until you pay the taxes, penalties, interest, and recording fees. When the IRS files a Notice of Federal Tax Lien, it will appear on your credit report, and this will damage your credit rating.
  • You Lose Your Property – The IRS will levy your property. A levy is a legal seizure of your property, or rights to your property, to pay your tax debts. After your property is levied by the IRS, it will be sold to complete your tax debt.
  • You Lose Your Passport – If the IRS certifies that you have a seriously delinquent tax debt, the Department of State won’t issue or renew your passport. If you already have a passport, the Department of State may revoke it. 
  • Face Criminal Charges – In the U.S Tax evasion is considered a criminal offense. If you’re charged with tax evasion, the Attorney’s Office may prosecute you in a federal court. In case the court finds you guilty of evading taxes, you may be sent to federal prison for a maximum of five years.

When Can The IRS File Criminal Charges Against You?

The first thing that will happen in a tax evasion case is the IRS will audit a filed tax return. The IRS will examine the tax return and decide if they believe that you made the errors knowingly. If you have made errors of large amounts for many years it will show a pattern of knowingly and willingly evading taxes.

Other things that the IRS will look for include:

  • Failing to report your income: Unreported income is a serious crime that can bring you under a criminal investigation. This may include leaving important details about transactions like the source of your income, including side hustles. Many gig economy workers have gotten into trouble with the IRS because of leaving out their side hustle income when filing taxes.
  • Dodgy behavior: If you have made false statements or knowingly hidden records from the IRS auditor, the auditor will know that you’re trying to evade taxes.

If you work with a tax professional, you won’t have to deal with the IRS directly. A tax professional will make sure that your taxes are filled correctly. This will ensure that no errors are made, as long as you are honest with your income. In case it’s discovered that you actually owe the IRS, a financial expert can work out an installment plan that will help you pay off that debt. They can also negotiate with the IRS on your behalf for a settlement. This is all depending on your financial situation.

Here at CuraDebt Tax, we have a team of tax professionals who can help you with all of your tax needs. See how to choose the best tax debt relief firm and then give us a call today for your free consultation. 1-877-999-0486

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