Dealing with a Federal Tax Lien: What to do
The payment of tax is an obligation for every citizen of the United States. Taxpayers who have unpaid income tax debts may end up getting tax liens placed on their personal property if they fail to make a payment.
A federal tax lien is the government’s legal claim over an individual’s property when they fail to pay their taxes. A tax lien affects your assets which includes any pieces of real estate you own, your car, money in the bank, retirement funds, and paycheck.
If you find yourself in such a situation where you are facing a tax lien, you should know how a lien will affect you. When the IRS places a tax lien on any of your properties such as your home, it now has a legal claim over that property but never for more than you owe. This means that the IRS will be the first to benefit from any economic activity carried out in the asset that will turn over a profit.
For example, if you owe the IRS $150,00, and it puts a lien on your home that is worth $225,00. If you sell the home, the IRS can’t take everything from you, only the first $150,00 that you owe. Although this may provide some comfort, a lien makes selling your property harder.
Most buyers, especially those in the market for a home may be scared off by the presence of an IRS tax lien because if they purchase it, the IRS can enforce the lien against them if you do not pay your tax debt.
Two ways a lien can be gotten rid of are:
– Completely paying off your tax debt.
– When the property value is more than double the amount you owe or when the property becomes worthless.
If you receive a notification for a tax lien, you may feel thrown off balance. Don’t fret over it because with the right information and expertise, it can be handled.
First, you must come to terms with the fact that you have to face the situation head-on. Next, you must explore the options available to you.
Like we stated earlier, the best way to remove a tax lien is to pay everything you owe. However, if you are currently unable to do that, three options you may find helpful which will reduce the impact of your lien are:
– Withdrawal: You can apply for this using Form 12277. What this does is that it takes away the public notice and promises that the IRS are not in competition with other creditors for your property.
– Subordination: This makes it easier for you to apply for a loan or a mortgage but it doesn’t take out the lien.
– Discharge of Property: This allows the property to be sold free of the lien.
Here at Souri, Gazda, and Co., we are aware of the fact that dealing with a tax lien is not the easiest thing to do. We have a qualified team of professionals here to help you. We can help you with organizing payment programs to help you pay less than you owe (if you do not have the financial capacity) and we can help you file for an Offer in Compromise.
Contact us today, and let us look into your case for free.
We are a tax relief firm dedicated to giving you the best results regarding resolving your tax debts. Our team of qualified professionals is available round the clock to provide you with the assistance you need to overcome tax-related issues and come out unscathed and financially free. Contact us now at 888-585-8629 or 617-430-4674 or send us an email at [email protected].
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