One way to legally challenge the payment of your unpaid taxes is through the process known as a Tax Liens Action. The government can be tricky on how much money they let you keep in tax refunds or property taxes when you have not been able to pay these amounts. In many cases these amounts are only a few hundred dollars at most. If they are not collected, the government has the option of contacting you or taking you to court, both of which will end up costing them money. If you owe taxes for more than a few thousand dollars then the IRS may contact you and ask for repayment before they proceed with any collections. If you refuse this offer, they can start a tax lien over your property that will remain until you pay off the debt. If you continue to ignore their requests for repayment, your property may eventually be sold to recover the debt. At this point they can elect to foreclose on your home if you are in default.
There are many reasons you may be able to take legal action against the IRS if they have not been able to collect on unpaid taxes. If they have gone too far in pursuing you for the money owed they can take you to small claims court. This is where you will be required to go before a judge and explain why you cannot pay the money. At this point in time you have up to one year to come up with the money or be subject to eviction from your home. For some individuals who owe back taxes to the IRS may opt for what is known as a collection plan. This means that the IRS will forgive your deficiency amount and will then ask you to pay the full amount back taxes owed in increments. In many cases this amount is far less than the actual penalty they demand. You would need to file an appeal if you do not agree with the settlement amount. If the appeal is denied then they can begin eviction procedures and you could be facing jail time for failure to pay.
Burden of unpaid taxes
Many individuals that owe back taxes find that the experience is very much like being in jail for several years. Not only are they facing the prospect of jail time if they are found guilty, but they may also be required to pay heavy fines for not paying their taxes. In many cases a judge will allow you to serve time in jail in lieu of paying your taxes. The IRS may also ask for other monetary penalties that could make it extremely difficult for you to ever pay your taxes. Even though you are not in jail for the lack of payment, there could be many consequences that come with not paying your tax bills. Many times this penalty is assessed on an annual basis rather than a monthly basis. You may find that the penalty causes you to owe more taxes each year than you normally would. This is why filing for an annual tax return is an excellent idea. It would allow you to catch any unpaid taxes so that you are not responsible for the penalties and possible fines.