If you have a tax debt, the IRS will track you down. This article talks about how the IRS tracks you and what you might do to maintain some privacy.
The IRS is the most aggressive collection agency in the world, with the most advanced computers. If they want you, they will find you. However, because of the number of taxpayers the Service is after, it might be years before the IRS tracks you or your assets. Rest assured, no matter how long it takes, they will eventually find you.
Because it takes time for the IRS to track you down, and because you can take steps to stay off of their radar for a time, you can buy time to organize your finances. Also, because it takes time for the IRS to track you, you should have time to complete the financial statements (433-A and B) and consult with an expert on your case. Sometimes delaying collections is just what the doctor ordered.
IRS computers are connected into all other government (Federal and State) systems, which means they have access to DMV, Unemployment, voter registration, and Social Security records. If you give your current address to any government agency, the IRS can access it. If you are receiving money from any group, the IRS can seize it. If you are getting Social Security or Unemployment payments, they will seize them. It matters little if this is the only money you have to live on… unless you set up an installment agreement, the IRS will take whatever you have.
The IRS also has access to bank and employment records. If you open a new bank account, it will usually take 2 to 4 months to find and levy it. Remember that banks send in interest statements at the end of the year, plus IRS computers are connected into the worldwide banking network. No matter where your account is located, they can find it. Though, sometimes moving to a new bank will buy you a few months of breathing room, which is all you need to get your finances in order.
Through Your Employer
The IRS also tracks you through your employer. When you get a new job, your employer submits various documents, including your social security number, to Unemployment and other agencies. Then, during the year, your company makes quarterly payroll tax payments with additional information and files a W-2 at the end of the year.
It can take a few months for the IRS to track you through a new employer. If you have been with your company for one pay period, you are at risk of wage garnishment.
- A wage garnishment is when the IRS sends a letter to your employer demanding all of your income except for a few hundred that they will allow you to live on. No court action is required. A wage garnishment is an administrative remedy.
If you are living and working outside of the United States, the IRS can track you through your bank, though, this can be more difficult. If they find your international bank account, the Service can only levy the account (take you cash) if the bank you are with has a branch in the United States.
For example, if you are living in Panama, the IRS tracks you down, and your money is at HSBC Panama, the IRS can levy your account. HSBC has offices in both Panama and the United States, so the collector sends a levy notice to HSBC NY, who forwards it to HSBC Panama, and your money is gone.
If you are concerned with the IRS tracking you, and you have money outside of the country, it should be at a bank that does not have a branch in the U.S. Though, this can be a complex issue… and you should never send money out of the U.S. for the purpose of hiding it from the IRS.
I hope this post on how the IRS tracks you has been helpful and give you some ideas on how to delay the attack. I believe strongly that you should take the initiative when dealing with the IRS. However, you should also take the time you need to get your accounting and finances in order to minimize your monthly payments.
Let’s face it, taxes for expats and the offshore markets is specialized information that your mom and pop accountant down the street is not going to understand. Speak with our CPA if you are serious about reducing your tax obligations and always staying compliant – click here to find out more.