Types Of Levy When A Self Employed Person Fails To Pay Tax

Posted on May 04, 2021 by Guy Atkinson

A tax is any financial obligation or other sort of tax imposed on a taxpayer by an administrative body or government department so as to finance various public expenditures and government spending. A taxpayer may have defaulted in payment of tax, given a huge tax debt, or may have been charged with tax fraud. Failure to repay, and/or evasion of or refusal to pay tax, are fully punishable by the law. It is very important for every taxpayer to understand the tax laws and how to pay them and report any income earned in excess of the tax amount. If tax avoidance is done, then the taxpayer can get leniency from the IRS.

The indirect tax system includes many kinds of taxes, the major ones being: Federal income taxes, state and local taxes, estate and gift taxes, franchise taxes, and tax on dividends and interest paid on mutual funds, Savings and loans, and tax on dividends received from stock ownership. However, these are not considered as direct taxes. These are collected by collecting information throughout the year about what a taxpayer earns. The information is then collated into a single record, which is then given to the IRS with the intention of getting the amount of tax that is due. This way the IRS can find out if a taxpayer has avoided paying his or her taxes.

Now the question arises as to which system of taxes is better-fairer than the progressive or proportional taxes? It is difficult to give a straight answer to this because in reality the system of taxes that we have now are based on habits and traditions that we are more used to, rather than on any kind of scientific calculation. Nevertheless, we can analyze the two systems of taxation in terms of who is affected by each system.

Progressive taxation systems collect money directly from the person who receives it, such as in the case of social security taxes paid on wages. Therefore, the higher the income of the person, the bigger his/her share in the unearned income tax pool. This means that the more the income the better the share. On the other hand, the percentage of the unearned income is calculated by subtracting the total income taxes paid from the current personal income, such as from the wages and salaries that a self-employed person gets.

Proportional taxation systems on the other hand depend largely on the value of the goods or services sold. When a business is being established, it is imperative that a good proportion is paid in taxes to the government so that the venture will not fail. The indirect effects of these taxes are felt when the government imposes certain kinds of levies, such as the income taxes levied on the firms that employ people and the indirect effect on the stock market by the governments imposed regulations.

As it was seen in the previous example, the system of indirect taxation is prevalent in many countries of the world and it is not just the US where they are implemented. This means that if a taxpayer thinks that he/she may be subjected to any kind of levy because of his/her unpaid taxes, then it might be the best idea for them to register in a debt-relief program (such as IRS Fresh Start Program Tax Debt Relief Program), which can help them manage their debt in an easy and efficient manner. As an alternative, they can also take the assistance of a legal professional if they have been prosecuted due to unpaid taxes.

A taxpayer advocate will look into the matter from a legal viewpoint and make sure that the taxpayer does not fall prey to prosecution even though it may not be on his/her own fault. If a taxpayer is innocent of the charge filed against him/her then the taxpayer advocate will represent and fight his/her client in the court and also represent the offended party in the court of law to help the client get compensated for the levy that he/she may have incurred.

Tip of the Day

Time management for Finance Professionals

time management


I’ve just re-read Richard Denny’s fantastic book ‘Selling to Win’, in which he mentions a time management technique that I learnt many, many years ago from an old boss of mine.


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