Tax Relief Blog
The IRS needs no introduction. However, the IRS is a United States Government body that oversees the collection and processing of taxes of varying kinds from individuals, businesses and corporations. The federal IRS tax lien is filed on taxpayers with unpaid back taxes, is an enforcement taskmaster holding individuals, businesses and corporations accountable for the taxes that are owed to the country. Our Los Angeles based tax representation firm assists clients in SoCal, Long Beach, Santa Ana and all other states in tax controversy matters.
On the other hand; Angelinos, US citizens, businesses and corporations mostly understand and fulfill their tax paying duties with sufficient help from EA, CPAs, tax lawyers and the IRS; that is more than happy to guide those that require guidance pertaining to back tax payments to avoid federal IRS tax lien.
The rules, regulations and the complexities involving the payment of taxes can be perplexing to lay persons. Payment of taxes on time and on a regular basis may not always be possible for various reasons and the accumulation of tax debt is common enough not to guarantee criminal proceedings or heavy penalties against a defaulter. Reason being and as mentioned prior; the IRS is affair and constitutional government body.
In the case of accumulated tax debt that exceeds a certain amount; the IRS will often resort to filing federal tax liens against defaulting taxpayers. Having a tax lien filed against you can be problematic for a number of reasons and for the lay person; an in-depth understanding of tax liens is required to proactively solve this issue. This article aims to do just that; with insights into tax liens and relevant information on how to discharge, release or withdraw a lien. Read further to know more.
Call our Los Angeles based tax representation firm at 877-788-2937.
What is a Federal Tax Lien?
Before going into solutions for a tax lien; let’s understand the nature and intrinsic definition of a tax lien. The points listed below effectively summarise the definition of tax liens for a lay person.
- The document filed by the IRS against a defaulting taxpayer with the local county authorities in which he or she resides or conducts business; is known as a tax lien.
- A tax lien cannot and shouldn’t be confused with a tax levy which is an administrative imposition by the IRS to seize property in case of a serious tax liability.
- On the other hand; a tax lien is a pre-op to a tax levy wherein the IRS notifies the tax defaulter and local authorities of a lien on the defaulter’s property. This literally means that the IRS has a right to your property if and when you fail to pay outstanding taxes within the timeline assigned to you.
As such; a tax lien filed in California counties, or other counties, can be considered a serious notification by the IRS to a tax defaulter to pay up or face loss of income and property. The implications of a tax lien cannot be underestimated and thus calls for release, discharge or withdrawal of a tax lien.
Dealing with Tax Liens
It has been made sufficiently clear that tax liens need to be dealt with but how? The suggestions listed below are indicative of steps you can take if a federal tax lien is filed against you, in Los Angeles, Long Beach, Santa Ana metro area in California.
Automated Withdrawal of Erroneous Tax Liens
If a tax lien is erroneously filed against you; the IRS will remove this lien when notified. One can claim erroneous filing of a tax lien if outstanding taxes are paid in full, if a successful compromise is agreed upon with the IRS or the lien is invalidated and unenforceable as it has passed the 10 year period as dictated by the statute of limitations. To have a federal tax lien removed; one can opt for withdrawal or release. Tax withdrawal isn’t guaranteed but is the ideal scenario wherein the IRS will withdraw the lien filed against you without a trace of the lien ever happening. This is owed to the taxpayer when the federal tax lien was filed erroneously. However, such errors rarely occur. In case of a tax lien being filed against you erroneously; contact an IRS representative as soon as possible. An agent from the IRS will double-check your account to ensure no outstanding payments and liabilities and withdraw the lien notification as soon as possible.
Tax Lien Release
In the case of a true defaulter; a lien release is a logical and available option. The lien will be released within 30 days of the defaulter clearing all outstanding taxes. However, the tax lien will remain on the defaulter’s credit report for a period spanning 10 years. The lien release is automated when outstanding taxes are paid in full and a taxpayer can expect a copy of the lien release from the IRS. This copy can be subsequently forwarded to credit agencies for the appraisal of credit reports. The impact of a tax lien on your credit report is substantial and it is very likely that your credit score will decrease. Once you have cleared outstanding tax payments; it is your prerogative to set your credit score right.
‘Fresh Start’ Tax Lien Withdrawal
The best way to deal with tax liens is to prevent them from being filed against you. However, once a lien has been fined and you cannot come up with ways to pay all dues within a short period of time; you can benefit by availing of the ‘Fresh Start’ scheme floated by the IRS. Your best bet is to decrease your tax liabilities down to $25,000 and to arrive at an installment agreement with the IRS. Two ways to bring your outstanding tax liabilities down is by transferring your dues to your credit card or a home equity line. If your outstanding tax liabilities are too much to pay off in full; the ‘Fresh Start’ offers you an avenue to withdraw your lien while paying off outstanding taxes in installments. It is important that you make full use of this opportunity to regain your status as a diligent taxpayer and to avoid tax levies at all costs.
In conclusion; negotiating with the IRS, effectively handling documentation and following the paper trail; isn’t always easy for taxpayers. Fortunately, tax defaulters can avail of the services of a federally authorized EA, CPA, tax attorney to deal with tax liens on their behalf.
Call our Los Angeles based tax representation firm at 877-788-2937.
