Tax Matters - The Top Tax Defenders Blog

Editor’s Note: This post was originally published in February 2023 and has been updated in 2024 for accuracy and comprehensiveness.

The IRS is rarely in a forgiving mood, but under the right circumstances, you might be able to earn their forgiveness for part of your tax debt.

This post dives into levy avoidance. If you don’t want the IRS seizing your property, this post is for you. Actually, this post is for people who have property levied by the IRS and anyone else who wonders what happens when you don’t pay your taxes.

Have you ever received a Dishonored Payment Notice from the IRS and wondered how Klingons got involved? Or maybe you worried you would need to sacrifice yourself in shame. Oh, no! My payment was dishonored. I must (fill in the blank with something terrible).

Have you ever tried to get money out of your bank account only to find your account was frozen? You may have been under a bank levy. Bank levies are a tool for collecting on a debt. It sounds counterintuitive that a frozen account would help you pay the debt, but the account is only inaccessible to you.

Have you received an IRS notice of levy on your bank account? That’s another name for an IRS bank account freeze or seizure. It happens when you don’t pay your tax debt.

Have you received IRS Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320? That means the IRS has determined you owe a tax debt, which you have neglected or failed to pay. Now they put a lien on your property so you can’t sell or refinance any of it until you pay up or make a deal.

If you owe the IRS money, you should trust that they know about it and are expecting prompt payment. The agency is not known for backing down when there's tax money to be collected, and you shouldn't count on qualifying for an offer in compromise to reduce your tax bill.

It’s October. Do you know what that means? If you filed for a tax extension earlier this year, it’s time to file your taxes. And If you haven't spent the last few months doing so, you need to get all your supporting documentation together, get your taxes calculated, and file the whole thing by the middle of this month to avoid penalties and additional interest.

Not filing taxes for several years could have serious repercussions. Not only can the IRS stop you from applying for a passport or a mortgage, but they can also create a Substitute for Return against you, charge you for failure to pay, or charge you for failure to file.

Receiving mail from the Internal Revenue Service is enough to make anyone’s knees quiver. It almost always means you owe more money to Uncle Sam for one reason or another. In the case of a Notice of Deficiency, formally known as CP3219A, it means that the information you provided with a tax return does not match up with the information a third party sent, like a bank for an employer.