Federal Tax Lien
A tax lien gives the IRS a legal claim on your property as security or substitution for payment. Your creditors will be publicly notified that the IRS now lays claim on all of your property, including property acquired after the lien was filed. A tax lien may be recorded on your credit report, and credit scores have a chance to drop significantly, making it difficult to qualify for a loan, buy a car or home, or apply for a credit card.
Tax liens may lead to property seizure if the IRS deems your property to be valuable. The IRS would then sell your property at a public auction, and all profits would go to paying your tax debt.
A wage Garnishment (also known as a wage levy) is put into affect after the IRS notifies your employer to withhold a portion of your earnings or face penalties themselves. The IRS will take the maximum amount allowable from your income, as well as garnish your welfare, disability, and up to 15% of your social security earnings. This money will be paid directly to the IRS, and will stay in affect until the tax debt is paid in full or a separate agreement is reached.
When the IRS is preparing to levy your bank account, it will notify your bank that all funds will be seized from your account. The bank will hold these funds for 21 days, in which time you can protest the levy on grounds of hardship. If the claim is denied, after 21 days the bank is obligated to send the funds directly to the IRS.
The IRS will pursue a company that hasn't properly filed their employee's payroll taxes, going after company owners, officers, or even the employee themselves. After an investigation and assessment of you and your employees, the IRS can begin collection efforts aimed at the company's assets or personal assets in order to satisfy delinquent taxes. The IRS may liquidate these assets, if it deems necessary.
Tax Penalties and Interest
Tax debts will accrue interest the longer it is in collection. "Failure to File" and "Failure to Pay" penalties can increase a debt with monthly fees. The best way to avoid this is to take action as quickly as possible.