What exactly is a Tax Lien?
IRS Tax Lien or Federal Tax Lien is the legal claim of the government against an individual’s property when they fail or neglect to pay a tax debt. As a result, the tax lien protects all interests of the government in the individual’s property which includes; real estate, personal properties, and even financial assets of the individual in question. This way, the government has an assurance that the taxpayer pays their due to the government.
Difference between Levy and Lien
Even if both processes involve properties, tax liens shouldn’t be confused with a levy. In a levy, properties are legally seized to settle a tax debt; in other words, the property is taken away from the debtor. Meanwhile, in a tax lien, properties are legally claimed to secure the payment of the individual’s tax debt.
If an individual fails to pay their tax debt, the IRS has the right to place a federal tax lien against that individual’s properties. This process is done by filing a public document which is called Notice of Federal Tax Lien. This will then alert creditors about the lien filing and that the government now has a legal right against that individual’s properties.
How does a tax lien affect a taxpayer?
Federal Tax Liens could affect an individual in multiple aspects;
- Assets – A tax lien could be attached to your assets and properties such as real estate, securities, and vehicles. The tax lien also covers future assets acquired during the duration of the tax lien.
- Bankruptcy – Even if an individual filed for bankruptcy, the Notice of Federal Tax Lien, your tax liabilities, and tax lien might still continue even after the declaration of bankruptcy.
- Business – A tax lien could also be attached to all business properties and to all the rights to the business property, which includes account receivables.
- Credit – If the IRS files for a Notice of Federal Tax Lien, an individual’s ability to get or use a credit card might be limited.
How to get rid of a tax lien?
Avoid the tax lien
To save yourself from the burden of a federal tax lien, the best thing to do is avoid getting filed a tax lien in the first place. It may be easier said than done but keeping your dues in check is always the best way to avoid a tax lien. Paying all your taxes in full and, most importantly, on time. If that won’t be possible, at least do not ignore the letters or correspondence that you receive from the IRS. They are more than willing to help you settle a payment plan or negotiate a payment option for your tax debt to be settled over time.
The best course of action
If you considered every possible option, paying off all of the debt is still the best course of action to get rid of the federal tax lien. This way, the IRS will release the person’s lien within thirty days after all the tax debt of the person has been fully settled.
Other settlement options
There are also other options to get rid of a lien or, at least, reduce the impact of the lien—namely, Discharge of Property, Subordination, and Withdrawal.
Discharging of a lien
Suppose a taxpayer decided to give up the ownership of a certain property, for example, when a business or home is sold. In that case, the taxpayer could apply for a Certificate of Discharge. An application for discharge of a federal tax lien releases the effects of the lien against certain property. Additionally, if the taxpayer decides to give up his primary residence, they can also apply for a relocation expense allowance.
Subordinating a lien
In this case, a federal tax lien could potentially be made secondary to another lien. This doesn’t remove the lien entirely; instead, it allows other creditors to move ahead of the IRS, which could, in turn, make it easier for a property to get mortgaged or loaned.
Lien withdrawal request
In particular cases, taxpayers are able to apply for a lien to be withdrawn but only if;
- The taxpayer settles a certain installment plan to pay the tax debt
- The Notice of Federal Tax Lien was filed too early or if it violates IRS procedures.
- The withdrawal will speed up the process of collecting the tax debt
- The withdrawal would be identified in the best interest of both the government and the individual in question.
To apply for a federal tax lien withdrawal, you must first have satisfied your tax liabilities. Additional requirements for this application are;
- The individual should be a qualifying taxpayer.
- The taxpayer’s due should be twenty-five thousand dollars or less.
- The taxpayer should have made Direct Debit payments at least three consecutive times.
- The taxpayer should be in full compliance with all other filing and payment requirements.
- The taxpayer can’t have defaulted on any current or previous Direct Debit Installment agreement.
IRS Tax Lien Attorney
A federal tax lien lawyer aids through the legal process of getting rid of an individual’s federal tax lien. They provide services before, during, and after the application of the removal of the tax lien on their client’s assets. The Tax Lien attorney first studies the case of their client in order to provide them with the best plan of action going forward with their case. They will ensure to provide and present their clients’ documents in the best detail to the IRS to further improve their chances for approval. The Federal Tax Lien lawyer will then give their client an in-depth assessment of the task at hand. They will ensure to provide the best legal advice for their case, may it be through compromise, lien discharge, or lien subordination. The Tax lien lawyer will decide what best suits their client’s needs and situation. During the process, the tax lien attorney will make sure that their client is treated fairly and in accordance with the law by the IRS. After all, it is in their best interest to keep their client secure for the duration of their client’s case. It is their role to guide, protect, and stay by your side through this entire process so that you wouldn’t have a hard time dealing with this matter.
Coast One Tax Group
Coast One Tax Group, based in California, USA, is a tax relief firm that offers its legal services nationwide. The firm is rated “A+” by the Better Business Bureau and has five-star ratings on both Google and TrustLink. Coast One Tax Group has been operating since 2008. Their team is composed of Tax Lawyers, Certified Public Accountants, and Enrolled Agents that help provide the best quality legal service to any tax-related case that anybody might have.
Through the experience of their legal experts and the longevity of their firm, they guarantee to achieve the best possible result to get their clients out of the hardships that they are facing because of tax-related problems. Coast One Tax Group offers three easy steps to get your tax lien sorted out immediately, Consultation, In-depth Analysis, and Resolution. Their team of well-versed tax lawyers will work to reduce and resolve your concerns in your back taxes with no hassle and no stress. If you are looking to settle any tax-related issues that you are going through, do not hesitate to reach out to the Coast One Tax Group through their website and avail your free consultation today.