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What could happen if you don’t pay your taxes?

| Mar 3, 2021 | Tax Liens

What could happen if you don’t pay your taxes?

Payment of taxes is not a request, rather, it is a compulsive duty that must be adhered to. The IRS can be quite punitive if taxes due to the revenue collector are not remitted when they fall due. One way of ensuring compliance is through imposing tax liens.

What is a tax lien?

A lien can be defined as taking of the defaulter’s property by a revenue collector in exchange for the tax that is due. When a taxpayer fails to submit their taxes promptly, they become tax delinquents. Such delinquents are then subject to tax liens that are recoverable through the attachment of their movable and immovable property. 

For any tax lien to be effective, a Notice of Massachusetts Tax Lien is issued against the defaulter. The notice is in writing and is issued in the locality of the taxpayer or where their real property is located. Apart from the property being seized or attached, a defaulter may also have a diminished credit score as the notice issued is in the public domain.

Once the notice has been issued by the Department of Revenue, there is a public list of shame that is curated. The list of dishonors has persons owing $25,000 and above. The list is available online and can be easily accessed by anyone. The list is only made upon a taxpayer having taxes beyond the above threshold and further, no attempt has been made by the taxpayer to pay their taxes for six months or above.

Can a defaulter redeem their property?

As a saving grace, tax liens do not exist infinitely, they have a statute of limitation. Therefore, they are only effective for ten years after an assessment has been done. If the revenue officers do not follow up, then they would be barred from attaching beyond the stipulated period unless a new notice is filed.

Once the property has been attached, it is quite possible to reclaim it. The taxpayer would have to pay the outstanding sum that led to the property being attached. Where any additional interests have accrued since the attachment of the property, the taxpayer would be obligated to clear those as well.

Conclusion

As seen above, tax liens do not only inflict a pecuniary embarrassment, they also bring forth public humiliation. Sadly, these events are largely self-inflicted. You need to be vigilant enough to ensure that your taxes are filed in time. If there are financial upheavals, then it is better to notify the revenue collector on the same.   

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