If you don't pay or make arrangements to settle your tax debt, the IRS can garnish, garnish and sell any type of real estate or personal property you own or have an interest in. The IRS can garnish (garnish) assets such as salaries, bank accounts, Social Security benefits, and retirement income. The IRS can also confiscate your property (including your car, boat, or real estate) and sell it to settle the tax debt. In addition, any future federal tax refunds or state income tax refunds owed to you could be garnished and applied to your federal tax liability.
An IRS garnishment allows for the lawful seizure of your property to satisfy a tax debt. You can garnish wages, withdraw money from your bank account (s) or other financial account (s), seize and sell your vehicles, real estate, and other personal property. If you can't pay in full right away, you may be entitled to an additional period (up to 180 days) to pay in full. There is no fee for this full payment; however, interest and any applicable penalties will continue to accrue until your liability is paid in full.
Individuals can set up a short-term payment plan by applying for an online payment agreement (OPA) or by calling us at 800-829-1040 (individuals). Consult telephone support for availability times. You may have heard that the IRS can “confiscate your assets”. Essentially, this is a levy (not to be confused with a levy).
However, the IRS normally only confiscates money. It's a big hassle for the IRS to confiscate houses, ships, etc. In fact, the IRS only confiscates property a few hundred times a year. For information on payment arrangements, installment agreements, and what happens when you don't take any action to pay, see Publication 594, The IRS Collection Process (PDF).
An installment agreement that does not pay the full balance before the CSED is called a partial installment agreement (PPIA). In addition, you can pay with your bank account or with a debit card, credit card or digital wallet or request a payment agreement online if you need more time to pay. You have a balance in your account and the IRS has issued a garnishment or has made a seizure to settle your tax debt. This bill begins the collection process, which continues until your account is satisfied or until the IRS no longer legally collects the tax; for example, when the collection term or period expires.
A fee on your bank account only includes what was in the account at the time your bank received the rate. If the IRS determines that you cannot pay any of your tax debts due to financial difficulties, the IRS may temporarily delay the collection by stating that your account is currently uncollectible until your financial situation improves. You may be asked to provide a new financial statement and supporting financial information during this review. As an independent organization within the IRS, the Taxpayer Advocate Service helps taxpayers resolve problems and recommends changes to avoid them.
If after a few years the IRS hasn't collected your tax balance, the IRS can transfer your account to a private debt collector. Installment payment agreements through direct debit and payroll deduction allow you to automatically make timely payments and reduce the possibility of non-payment. The IRS can continuously collect certain federal payments you receive from you, such as Social Security benefits. In addition to interest, the IRS charges a non-payment penalty on your unpaid tax balance (0.5% per month).
Interest and penalties for late payments up to the maximum allowed by law will continue to accrue as long as you make payments in installments. For more information on penalty and interest charges, see Chapter 1, Filing Information, Publication 17, Your Federal Income Tax for Individuals.