Every year many New Zealanders end up in debt to the Inland Revenue (IR) Department due to underpaying or underreporting their tax liabilities, whether on purpose or by mistake. Owing the Inland Revenue can be worrying and bothersome, particularly when they have placed a lien or levy on your wages and property. The purpose of this post is to educate our readers about tax debt so that they can avoid getting into it. Here we will also reveal how to get rid of one if you have already got into tax debt. So, continue reading to level up your tax knowledge.
Understanding Tax Debt
Individuals create and get into a tax debt when they fail to pay their tax liabilities by the due date. Here it is essential to understand that the Inland Revenue Department is accountable for collecting taxes and monitoring taxation practices. You can expect urgent notices from the IRD if you fail to pay your taxes and get into a tax debt spiral. Your further delay in paying your tax liabilities will trigger the tax recovery action in the Inland Revenue Department. The tax debt collection process typically includes:
- Putting a deduction notice on your bank account
- Sending you legal action notice
- Asking your clients or employer to withhold an amount and pay your taxes
IRD may even take serious actions like charging penalties and interest on your tax debt if the above measures do not work. The penalties and interest will continue adding up on your tax liabilities until you pay them off. In extreme cases, they might even take legal action against you like issuing a levy on your property, assets, and bank account.
Digging Your Way Out of Tax Debt
Taxation in general and tax debt, in particular, are very complicated subjects. Dealing with them on your own can be daunting, especially if you don’t have any prior experience in this sector. We recommend seeking professional tax debt services if you find yourself in a tax debt spiral. Taking immediate action is essential when you see your tax level increasing. Inefficiency in handling your tax liabilities at the right time will make your tax debt and debt interest unmanageable. It may also lead to tax debt default.
Your Professional Help Is Here!
In conclusion, we would say that seeking professional help is your best chance to get out of tax debt and save yourself from penalties, lawsuits, and disputes. Now the biggest question is, who should you trust in a critical situation like a tax debt spiral? Elite Accounting is the answer. We are a highly rated, well trusted chartered accounting firm committed to helping clients in their financial matters. You can count on our tax debt services and snap out of the trap. Contact us now to discuss your tax liabilities and financial conditions with one of our expert CAs. Let us help you get out of tax debt.
