From Yahoo Finance: 2025-04-06 11:02:00

Owing tax debt to the IRS can lead to various consequences if not addressed promptly. Ignoring or underpaying can result in financial losses, travel issues, and even wage garnishment. Respond promptly to avoid further complications.

The IRS may use private debt collection agencies if you fail to respond or have old tax debt. These agencies offer limited options compared to the IRS, potentially limiting your ability to negotiate favorable payment terms.

Wage garnishment involves deducting a portion of your earnings to pay off tax debt. Factors like deductions and dependents determine the amount. Filing for bankruptcy or showing IRS rule violations can stop this action.

The IRS can levy your bank account to collect overdue taxes. A 21-day freeze period restricts access to funds. Negotiate a payment plan during this period to prevent the IRS from taking the money.

Failure to pay tax debt can lead to the IRS seizing assets like your home or car. A federal tax lien can affect credit and asset sales. Working with the IRS to resolve debts is the best course of action to avoid asset seizure.

Unpaid tax debt exceeding $62,000 can lead to passport restrictions. The IRS notifies the State Department, impacting travel and employment opportunities. Resolving the debt or negotiating with the IRS is necessary to lift these restrictions.

Read more: 5 Scary Things the IRS Can Do If You Owe Tax Debt