IRS Federal Tax Lien
We will take a closer look at what an IRS Tax Lien is and the reasons why the IRS files them. Furthermore, we will explore the different options for removing the IRS Tax Liens and avoiding any future implications from the IRS.
TLDR;
IRS Files the Tax lien when you have not paid the taxes owed after the legal warnings
The IRS Tax Lien is Public Information, recorded in the County you reside or have property
You can appeal the tax lien filing or resolve the issues with the Office of appeals
The IRS files a tax lien in the county you live in. IRS Form 668 and the Notice of Federal Tax Lien Filing are sent by certified mail.
When you owe taxes to the Internal Revenue Service (IRS), they have the legal authority to place a lien on your assets, which is known as an IRS Federal Tax Lien. This lien is used to secure the government’s interest in your property and assets, ultimately making it difficult for you to sell or even refinance your property. This is also the initial step the IRS takes to preparer for an asset seizure.
What is an IRS Tax Lien?
An IRS tax lien is a legal claim which is put in place by the government against your property and assets when you have unpaid tax debt. This legal claim essentially establishes the IRS’s right to seize your assets in order to cover the cost of your tax debt. The lien may attach itself to anything of value that you own, such as your car, personal property, homes and even business assets. The lien is placed by the IRS when they believe that you cannot or will not pay your tax debt.
Why Does the IRS File Tax Liens?
The IRS only files a lien when you have failed to pay the tax due after receiving the IRS series of collections notices for payment due. If the tax debt is not paid after a certain period of time, the IRS may file a notice of federal tax lien in the county, which is recorded against your assets. The Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 is sent via USPS certified mail to your address recorded at the IRS. The main reason why the IRS files a notice of tax lien is to secure the US Government’s interest in the your debt amount owed. If you have any assets registered in the county, the IRS is ensured that they can receive payment through the federal tax lien if there is a sale or refinancing.
How to Remove a Tax Lien?
If you have an IRS tax lien placed against you, there are several options to get it removed. The following
1) You paid off the balance on the tax lien
2) the IRS accepted an Offer In Compromise, and you met the terms of the OIC.
3) You have paid the balance under $25k, and have entered into a payment plan of 60 months.
4) The IRS Collection Statute Expiration Date has passed & the IRS has written off the balance. When you have a balance owed to the IRS, the IRS only has 10 years to collect. When the time is up, the IRS has to write off the balance, or essentially your balance goes down to $0.
IRS Federal Tax Liens FAQs
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A federal tax lien no longer affects your FICO Score. In the past, your FICO score would be tremendously affected, however in recent years that is no longer the case.
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The IRS Notice of Federal Tax Lien is public information when it is filed in the county. This information is used by many Tax Relief Marketing companies that use many unethical practices to get you to pay them.
These marketing companies mail postcards and letters that seem to come from the IRS or Government agency that would threaten additional action against you. The letters often state that your income & bank are under imminent threat. Upon calling the phone numbers on these solicitations, you are greeted by an aggressive salesperson interested in selling you services so that they earn commissions.
For any Help, make sure the person is either an Attorney, CPA, or Enrolled Agent. A qualified tax attorney will give you sound advice on what the steps moving should be without any fluff.
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You can file an appeal known as a collections due process hearing within 30 days of receiving the Notice of Federal Tax Lien.
The appeals process is also known as a CDP hearing.
When you file an appeal, the office of appeals will assign an IRS Appeals Officer that will review your request.
The CDP, you can dispute the filing of the lien or request its withdrawal. In addition, if you filed the CDP while in active collections, you can resolve the collections & get a resolution in place that overrides IRS collections.
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The IRS federal tax lien will remain recorded in the county until any of the following:
1) You paid off the balance on the tax lien
2) the IRS accepted an Offer In Compromise, and you met the terms of the OIC.
3) You have paid the balance under $25k, and have entered into a payment plan of 60 months.
4) The IRS Collection Statute Expiration Date has passed & the IRS has written off the balance. When you have a balance owed to the IRS, the IRS only has 10 years to collect. When the time is up, the IRS has to write off the balance or essentially you r balance goes down to $0.
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If the taxes shown are incorrect, you have the right to dispute the amount with the IRS.
There are several options to dispute the amount shown on the Federal Tax Lien.
The following are ways to dispute the taxes owed on the Tax Lines:
1) Amended Tax Return.
2) Identity Theft Claim
3) An IRS Offer In Compromise: Doubt as to liability program.
4) Reconsideration of an SFR Tax Return
5) Audit Reconsideration.
The burden of proof is up to you to show the IRS, and you must follow up when filing a dispute with the IRS.
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Yes, it is possible to sell your property with an IRS tax lien.
There are several options that exist when. Generally, the taxes owed on the IRS Federal tax lien need to be paid off from the sale proceeds before the title can be transferred.
The proceeds from the sale of the house pay off any Mortgages, and liens in succession before the remainder of equity gets paid off.
If the sale of the property will not yield any equity, it is still possible to sell the property, even if the proceeds just pay the MOrtgages & the IRS Liens.
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The IRS files a tax lien by recording a Notice of Federal Tax Lien with the appropriate state or local government office where you reside.
The filing of the IRS Tax Lien is public information and the reason why so much mail arrives from tax marketing companies.
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Yes, the IRS can still file a tax lien even if you're on a payment plan.
The IRS may file a federal tax lien when right when the payment plan gets established. Usually the IRS files the federal Tax Lien when the total amount of tax debt is over $50,000. However, the IRS may file a federal tax lien whenever there is a tax debt owed to the IRS.
An IRS Tax Lien is an extremely powerful tool that the IRS uses to secure its unpaid taxes.
It can also have adverse consequences for you. The good news is that there are solutions and strategies available to remove an IRS Tax Lien. Seeking help from a Los Angeles tax attorney who can guide you through the process may be beneficial. With prior planning and accurate record-keeping, delinquent taxpayers and tax debtors can avoid the burden of an IRS Tax Lien, or at least mitigate its coercive effects.
If the IRS has a federal tax lien against you, and you would like my team to review your case, click the link below to schedule a free case review.
