A federal tax lien is the IRS’s legal claim against the taxpayer’s property when they neglect or fail to pay their tax liability. The IRS uses liens to get people to pay the tax owed. It’s one of the many tools in their arsenal, and for many, it can be one of the worst penalties the IRS can inflict. If the IRS places a lien on your property, it can show up on your credit report and hamper your credit score. The worst part is you may not even be aware of the lien until you apply for a credit card, car loan, home loan, or refinance. Continuing on the subject, in this blog post, we answer commonly asked questions about tax liens. We will provide guidance on the ways to get assistance.
1. How do you find out when an IRS tax lien is placed?
Before the IRS places a tax lien, they assess the taxpayers with an unpaid liability and demand payment. If the taxpayer does not make any payment within 10 days of the demand, the IRS sends out a notice of federal tax lien. The IRS also sends a Notice of Federal Tax Lien in the mail after the tax lien has been filed or may sometimes try to contact you by phone.
2. How is a ‘tax lien’ different from ‘tax levy’?
A tax lien is the government’s “invisible” claim on the taxpayer’s property, but a tax levy is the actual seizure of their assets. With a tax levy, the IRS can take money from garnish wages, bank accounts, and even seize the physical property owned by the taxpayer.
3. What assets are subject to a tax lien?
A tax lien covers all the property of a taxpayer along with any future assets they may acquire. The rule keeps it quite broad and open to interpretation and can pretty much cover anything, both tangible and intangible assets.
4. How can I avoid a tax lien?
You can avoid tax lien by staying in full compliance with the tax law. If you are unable to pay the taxes, contact the IRS and make an agreement with them to pay your taxes through one of the various settlement mechanisms instead of avoiding IRS notices.
5. Can I appeal a tax lien?
In a case where a tax lien is claimed against your asset(s), you can turn to the Office of Appeals, which is an independent entity inside the IRS. Your situation qualifies you to apply for two appeal procedures, both of which involve a hearing. These procedures are Collection Appeal Program (CAP) and Collection Due Process (CDP) ; they both give the right to appeal the tax lien brought against you. You can represent yourself at the hearing or be represented by a tax attorney.
6. Can an IRS tax lien be removed?
An IRS tax lien removal is possible, but the agency expects you to get back into compliance with your taxes. You can also get federal tax lien release by settling through an offer in compromise, paying in full, allowing the statute of limitations to expire on the tax debt, or offering a bond to the IRS that guarantees payment of the tax debt. If you paid your tax debts, make sure to ask for your tax lien withdrawal instead of paid or released on your credit by contacting the IRS.
7. Can I get the lien withdrawn from my assets?
No matter how callous the tax authorities may seem, they really don’t want to come after you to get the money you owe. You can file IRS Form 9465, which is an Installment Agreement Request. The IRS must allow you to make payments on your overdue taxes if you owe less than $50,000. They could remove the tax lien from your property (or asset) if you work with them to set a payment plan in place and pay the amount due.
8. How do I approach the Federal Taxpayer Advocate service?
Nobody likes a tax lien or anything that has to do with the IRS because most of the time it can get messy. In the event that you are finding the terms of the tax lien difficult to deal with or if it’s causing you financial difficulties, you can reach out to the Federal Taxpayer Advocate Service. You can fill out a Form 911, which is a Request for assistance from the Taxpayer Advocate Service.
9. Can my state tax authority help with an IRS tax lien?
No, the state tax authority will not be able to help you with an IRS tax lien. If you have a tax lien situation, you can contact the IRS or the Federal taxpayer advocate service to find out what options are available to you. They can help you come up with installment plans for managing your tax lien.
Seeking Assistance Regarding a Tax Lien from an Attorney
On the matter of assistance, let’s discuss how to get help regarding your IRS tax lien. Although you can take the DIY route to resolve IRS tax liens, it is always advisable to consult an IRS attorney who specializes in handling tax problems. Read on as we give you a brief guide on how to get IRS tax lien assistance from an IRS attorney.
1. Collect All Financial Documents
Before acting upon a tax lien, taxpayers must do their homework. For the IRS to remove a tax lien filed under your name, they need legitimate proof that they made a mistake while processing your tax return. It is, therefore, essential to collect all financial documents. From your monthly income slips to the smallest of expenses, every financial document holds importance in proving your case. You can also seek professional help and hire an IRS tax attorney to make sure you don’t miss any detail when collating your financial information.
2. Check Filing History
There are a number of reasons why a tax lien can be filed under your name. The most common reason is noncompliance. If a taxpayer fails to file their tax returns and ignores the notices sent by the IRS, the tax authority can impose a tax lien. In such a case, it is essential to check your filing history and see whether you have missed filing any of your taxes or tax returns.
3. Discuss Your Situation and Options with a Tax Lien Attorney
IRS tax liens can make your life difficult only if you ignore them and do not take immediate remedial actions. A tax lien may even make it impossible for you to sell your property, as the buyer will be reluctant to buy, since the lien may become their liability. Although the IRS provides a number of ways to help taxpayers resolve their tax issues, it is advisable to hire an experienced IRS tax lien attorney to guide the way. Here are some of the options they may recommend:
(i) File an Appeal at the Office of Appeals
The IRS may make mistakes when processing your taxes and return, which can also lead to a tax lien. If, however, you can prove that there has been an error, you can appeal to the Office of Appeals. Keep in mind that all procedures offered by the IRS involve a hearing. It is, therefore, essential to make all arrangements and be fully prepared for the hearing, if necessary. You can either take the DIY way and represent yourself, or hire an IRS tax lien attorney to represent your case.
(ii) Lien Withdrawal
For a lien withdrawal, taxpayers must have a bank balance lower than $25,000. To file for a withdrawal, use the Form 12277 to make a formal request to the IRS. Once the request is filed, the IRS responds with the Form 10916(c), which can hold the solution to your problem. If the IRS approves your request, not only the lien is removed, but every thread that could show a tax lien was filed against your name is also removed.
(iii) Lien Release
If a taxpayer qualifies for the IRS Fresh Start Initiative (FSI), and has a bank balance lower than $25,000, they are eligible to request for the lien to be released. If the IRS approves the request, the lien is removed from the property and/or other assets. Unlike a lien withdrawal, releasing a tax lien will not remove it from a taxpayer’s credit reports; they can, however, consult their IRS tax attorney to find ways to improve their credit report.
Talk to an IRS Tax Lien Attorney in Dallas, Texas
If the IRS has issued a tax lien against your property, it is essential to immediately take action to resolve the situation before it worsens. The IRS tax attorneys at the Law Offices of Nick Nemeth in Dallas, Texas, have extensive experience in addressing all sorts of IRS tax problems, including IRS tax liens. For a confidential, no-obligation consultation, simply call (972) 426-2553 or fill out our contact form.
