Are you drowning in debt? Do you have collection agencies calling you all the time? Are you considering bankruptcy? Now take all of that stress and add an IRS tax debt into the mix.
When I was an IRS-Hitman we expected you to pay your IRS debt first and any other creditors second.
In fact we didn't even consider credit card debt to be a necessary expense when we used to figure out your base income.
So which debt should you worry about more? You're already up the creek...
If you have debt collectors going after you, you're credit is already shot, so that doesn't come into the equation.
What you need to consider when you owe money to creditors and you also have an IRS debt is which debt takes precedence.
I won't advise you as to which is more important, but what I will do is break down how severe the collection actions of the IRS collectors and collection agencies are.
Let's look at the collection agencies first.
Can I be sued? I'm sure if you're in debt collectors have already threatened you with all forms of legal action trying to scare you into paying off your debt.
Here's the deal on legal action that can be taken against you with collection agencies: Collection agencies have to abide by the State laws that you live in.
Only 19 States allow legal action such as home levies, or wage levies on debtors.
That means if you live in one of the other 31 states all that collectors can do is call and harass you.
Repo men...
Collection agencies can only repossess the property that you owe your creditors on.
Collection agency repossession agents can not walk into your home and take whatever they want.
State's rights...
Even in States where collection agencies can garnish your wages or levy your home or bank account they are limited in what they can do.
They can only garnish W-2 wages.
If you're an independent contractor or if your income comes from tips they can't go after your wages.
Settled in Full...
You can actually settle your debt with a collection agency with a single lump sum payment that can be anywhere from 80-40% of the original debt.
Most collection agencies have the ability to negotiate a settlement right over the phone.
Now let's talk about the IRS collection branch.
Your lifestyle in jeopardy...
Let's start with wage levies, home levies, and bank account seizures.
The IRS is not bound by individual State laws concerning collection practices to collect on your tax debt.
That means regardless of where you live the IRS can take collection action against you..
Nothing is safe...
Not only that, they can levy or seize any and all assets to pay off your debt.
They have to leave you with items required for basic living, but everything: including your grandmother's jewelry is fair game.
They can take it all...
The IRS collection machine can garnish any and all money that you make or have invested in accounts.
If you're a contractor they can levy their due from your clients before you get paid.
It doesn't matter what you do; they can impose a tax levy on your money.
Not that easy...
Settling your tax debt for a single lesser sum is almost impossible to do with the IRS.
In fact only 2% of Settlements for "pennies on the dollar" are ever even accepted.
Plus the process is long and difficult.
The lesser of two evils...
That's what you will have to deal with when you a tax debt the IRS.
The IRS expects their debt to be paid first, and the collection actions when levying your wages or bank accounts make regular collection agencies seem almost charitable.
Now you have the smoking gun...
Use it!