A federal tax lien is one of the last things you would want to receive as a taxpayer. Under a tax lien, the IRS claims the rights to the defaulter’s assets, such as real estate, bank accounts, and vehicles. The lien may even limit the taxpayer’s ability to get credit in the future. Taxpayers, who file for bankruptcy, may still have to continue paying the lien. If you too have received an IRS tax lien, here are a few things that you need to know to find your way out.
The Options at Hand
When you are past the due date for tax payment, things can get much worse than you can ever imagine. In long overdue cases of non-payment, the IRS holds the right to claim the defaulter’s assets, both tangible and intangible. An IRS tax lien can not only give you stressful days and sleepless nights, but also has a negative impact on your credit reports, as it causes your credit score to plummet drastically. Thankfully, there are a few ways to move out of this quagmire.
1. Pay Your Debt in Full
The quickest way to get rid of a tax lien is paying the outstanding debt in full. Once you have settled the outstanding tax debt, the IRS will release your lien within a period of 30 days. You can pay online directly through your bank account using your phone or mobile device and get an instant payment confirmation, too.
2. Get an Overview of How Much You Actually Owe
It is a wise practice to understand your tax situation fully before you start paying off your due amount. Document how much unpaid tax you owe to the IRS each tax year. This will help you monitor what is going on with your federal tax lien. Maintain a detailed spreadsheet on current balance due, returns already filed, late penalties, and installment agreement. Such an approach to tax debt will give debtors a bigger picture and tell them what exactly they must do.
3. Discharge
“Discharge” helps remove lien from a specific property. Taxpayers may get a discharge of property from a federal tax lien under one of the Internal Revenue Code (IRC) provisions. Once the property is discharged, taxpayers need to sell it off and settle their tax debts.
4. Subordination
Subordination of a lien is different from the release of a lien. In the case of subordination of a lien, though the lien stays as is, its priority gets lowered as another lien against the same property gains priority over the lien in question. This means the other creditor gets the right to be paid before the tax lien gets paid.
5. Withdrawal
Under certain circumstances, you may request the IRS to withdraw the Notice of Federal Tax Lien issued in your name. The benefit of a IRS tax lien withdrawal as compared to a lien discharge is that once withdrawn, the lien does not reflect on the taxpayer’s credit history, while it does reflect in the case of discharge.
Obtain a copy of your credit report and check its public records section that shows all reported tax liens. Go to the tax lien you are looking for and cross-check the balance information given therein to ensure there is no discrepancy. In order to qualify for an IRS lien withdrawal, you must first clear, in full, all pending liens and then fill out IRS Form 12277. Thereafter, a credit bureau will consider withdrawing the bad debt if you meet all the requirements.
Must Read: Tax Lien vs. Tax Levy: Examining the Differences
6. Wait for the Statute of Limitation to Expire
The IRS typically imposes a 10-year statute of limitations on its tax collections. As a general rule, the IRS will attempt to collect unpaid taxes for up to 10 years, counting from the time they assessed the taxes. If you are still unable to pay the taxes by the end of these 10 years, you may need to sell your house or refinance to pay the IRS. The IRS will cease its collection efforts, subject to some exceptions. For instance, if the IRS had filed a tax lien against you in 2007, and you are unable to pay it off for some genuine reasons, the IRS will withdraw its lien by 2017.
7. Apply for IRS’ Fresh Start Program
Recently, the IRS announced a program called Fresh Start, which makes the lives of debtors who qualify easier. Under this program, you can appeal for a withdrawal of your federal tax lien as if it never existed. For that, you must meet the following criteria, namely:
- You are a qualified taxpayer
- You must not owe more than $25,000
- You have made at least 3 consecutive direct debit payments
- You are compliant with all payment and filing requirements
How To Get IRS Tax Lien Assistance
If you are wondering how to get assistance regarding a tax lien, the Law Offices of Nick Nemeth has got you covered with our expert tax attorneys in Dallas. Although the IRS has a number of internal organizations to help with various IRS tax problems, our IRS tax attorneys provide comprehensive assistance to resolve tax issues. Continuing the discussion, in this section, we cover five IRS organizations you can contact to get assistance regarding tax lien.
1. Office of Appeals
The Office of Appeals is an independent organization within the IRS that offers tax dispute resolution, including tax lien assistance, through an administrative and informal procedure. Before filing an appeal to the Office of Appeals, it is important to do your research and check whether you qualify for an appeal. Before you proceed, it is advisable to seek tax lien help from tax professionals, such as the team of Law Offices of Nick Nemeth.
2. Taxpayer Advocate Service
The Taxpayer Advocate Service or TAS is another independent organization within the IRS that helps individuals tackle tax issues. TAS is also responsible for keeping you updated on any changes made in the IRS or tax laws. The toll-free number to get in touch with the Taxpayer Advocate Services is (877)-777-4778, but before contacting the body, you need to be sure about all facts and know how to present your case.
3. Collection Advisory Group
The Collection Advisory Group offers IRS tax lien assistance for simple and complex issues, such as discharge, subrogation, subordination, and withdrawal. It is, however, important to do your research and seek help with IRS taxes liens from IRS tax lawyers, such as our team at Law Offices of Nick Nemeth, for tax lien assistance. If you need expert guidance on any matter related to IRS tax lien, the team of lawyers at the Law Offices of Nick Nemeth will be happy to help.
4. Centralized Lien Operation
The Centralized Lien Operation or CLO helps in offering tax lien assistance for basic tax issues, such as verifying a tax lien, requesting for lien payoff amount, and releasing a tax lien. CLOs are solely responsible for storing, processing, and managing tax lien information in the Automated Lien System, ALS. To contact the CLO, call (800)-913-6050.
5. Centralized Insolvency Operation
The Centralized Insolvency Operation or CIO is responsible to deal with all questions and doubts related to your bankruptcy application or whether it is affecting your tax debt. When filing for bankruptcy, it is advisable to seek help from tax professionals and follow through the procedure with ease and minimum hurdles. To get in touch with the CIO, call (800)-973-0424.
Looking for IRS Tax Lien Assistance? Contact Us, Now!
It is advisable to seek professional help when facing IRS tax problems to avoid further financial crises. If you have received a notice of federal tax lien or have any questions related to tax liens, please call The Law Office of Nick Nemeth and schedule a free, no-obligation consultation with Nick personally. You can reach us at (972) 426-2991 or fill out our contact form, and we will get back to you shortly.
