How Unpaid IRS Balances Can Affect Florida Taxpayers

If you owe money to the Internal Revenue Service (IRS), your first concern is probably how to pay it. Unfortunately, unpaid tax debt can create problems that go well beyond your bank account.

From your ability to get a mortgage to your ability to travel internationally, unresolved IRS balances can have major ramifications. Our experienced Florida tax and IRS attorney breaks down what you need to know.

The Ramifications of Unpaid Federal Tax Debts in Florida

Florida taxpayers are often surprised to find out that the IRS does not report unpaid tax balances directly to the major credit bureaus. However, while owing money to the IRS will not automatically lower your credit score, there are still serious ramifications.

The IRS may file a Federal Tax Lien, garnish your wages, seize assets in bank accounts, or take other actions. The practical effects on Florida taxpayers can include:

• Difficulty obtaining a mortgage, refinancing a home, or securing other loans.
• Complications selling real estate, since a federal tax lien attaches to all property.
• Challenges opening business lines of credit or securing contracts that require financial background reviews.
• Missed payments on other obligations, such as credit cards or loans, due to wage garnishment or a bank levy.

Unfortunately, financial stress due to the above or other issues directly related to tax debt can indirectly impact your credit score.

Passport Risks and Other Consequences Florida Taxpayers May Not Expect

Beyond financial concerns, unpaid tax debts can limit your ability to travel. Under IRS Code Section 7345, taxpayers with seriously delinquent tax debts are reported to the U.S. Department of State, which can deny the taxpayers’ passport application or revoke their current passport.

Florida taxpayers can protect themselves from this and other consequences by taking action before the situation escalates. Key steps include:

• Respond promptly to all IRS notices.
• Consider your options for satisfying the debt, including installment payments or an Offer in Compromise.
• Request lien withdrawal once the debt is paid or you enter into a qualifying direct debit installment agreement.
• Stay current on all future tax filings and payments while resolving an existing balance.
• Get professional legal help before the IRS takes enforcement actions, as your options narrow once a lien or levy is in place.

The IRS will reverse a passport certification and notify the State Department within 30 days of a qualifying resolution, so addressing the debt directly and promptly is always the most effective path forward.

Consult an Experienced Florida Tax and IRS Attorney Today

Unpaid IRS debt can affect your credit standing, your real estate transactions, and even your ability to travel, often before you realize the full scope of the problem.

Ronald Cutler, a Certified Public Accountant and former FBI Special Agent specializing in tax cases, has over 50 years of experience protecting clients from tax debts. To discuss your situation and options available to help, contact us today and request a consultation with our experienced Florida tax and IRS attorney.

Sources:

irs.gov/businesses/small-businesses-self-employed/understanding-a-federal-tax-lien

uscode.house.gov/view.xhtml?req=(title:26%20section:7345%20edition:prelim)