18 Nov What Does a Tax Lien Do for Truckers?
If you’re working as a truck driver and you owe back taxes, tax liens can seriously affect you – unless you take proper action. The IRS uses tax lien as a collection tool to pressure truck drivers (and all other taxpayers) into paying their unpaid taxes or making payment arrangements. Some state tax agencies under the state law have the legal right to suspend your driver’s license (private or professional) because of back taxes! The good news is that tax liens can be temporary or released after being accepted into a payment program in many cases. So, if you wonder how all of this happens and you’re not sure what tax liens are, keep reading to get the info on the subject.
What Is a Tax Lien?
Simply put, a tax lien is a claim the government makes on your financial property. The government legally claims your property when you neglect or cannot pay your owed taxes.
How does It Work?
The IRS files the Notice of Federal Tax Lien to notify creditors that the government has a legal right to your financial property. Tax liens protect the government’s interest in all your assets, including real estate, financial, and personal property. This naturally includes your means of work, that is, your truck.
Delinquent motor vehicle taxes are reported to the DMV (Department of Motor Vehicles). The DMV will deny registration renewal on any and all vehicles in a driver’s name or any vehicle registration until all taxes, with interest and fees, are paid in full. Payments must be made in either cash, bank check, or money order at the tax office to get clearance from the DMV. The clearance is usually processed in 24-48 hours. After the motor vehicle taxes become delinquent for one year, your account will be referred to an outside collection agency. If this happens, truckers will have to pay the additional collection fee of 14%, and their past-due taxes will be reported to a credit bureau.
What Are The Consequences?
It may take up to three years for the IRS to assess your liabilities on federal income taxes from the date you were required to file or you’ve filed a tax return. This time frame is known as a Statute of Limitations. It can be extended to six years if you’ve underestimated your gross income by over 25%. But, if you’ve failed to file a return, a statute of limitations will have no time limit.
Considering the hours of time and attention a truck driver is giving to his driving, it’s not surprising that you can’t always keep track of your compliance with the tax laws. But, if you get too deep in tax debt, there will be severe consequences, and they won’t be pretty. Don’t let back taxes get in the way and restrict your ability to work under professional licensure. If you still need some additional tips or information that wasn’t covered in this blog, make sure to check our other blogs or contact Golden Tax Relief – we will be happy to help!