All through the process of collection, it doesn’t matter whether the taxpayer begins a payment process with the IRS, or not. The state or the IRS will have to file a Notice of Federal Tax Lien to protect the government’s money. This lien is needed by law to institute precedence as a principal creditor in competition with other creditors in some situations, such as sales of real estate and bankruptcy proceedings. Once a lien has been filed, it might become visible you’re your credit report and may relentlessly harm a taxpayer’s credit ratings. For that reason, it is vital that a taxpayer work to solve a tax liability as fast as he can, before lien filing turns out indispensable.
This is the first main step the IRS takes in an effort to collect taxes from a defaulter. A tax lien can be a key mark alongside your tax records and your credit reports, and acts like an insurance policy to ensure the tax liability is not ignored. The filing of a Lien Notice makes it hard to get loans. It might also result to great involvedness to the taxpayer till the tax debt is cleared and the lien is released. State tax liens are seen as a worst-case scenario; however there are defensive steps you can take to keep off the lien.
When can a tax lien get filled?
If you have unpaid aberrant taxes and has not made efforts to contact the IRS or set-up payment plans, the IRS will post several tax liability evaluation letters, which includes penalties, unpaid taxes, and interest charges. The last letter the taxpayer receives prior to a lien being filed his intent to levy. This is essentially a final notice, which points out that the IRS has tried unproductively to collect in standard ways. The step that follows is a tax lien, which is not usual. It is important to note that recently, the IRS increased the debt sum for tax liens to a minimum of 10,000.
If a lien notice is intercepted before it actually becomes a lien, a taxpayer can probably avoid the stress and long term negative impacts of the lien, and even meet the criteria for a penalty abatement, which can minimize the total amount owed by as much as 20%-50%.
What are the effects of tax liens?
They can cripple you financially for a period of nearly ten years, according to the statute of limitations. This will make it hard or impractical to make any main purchases, like cars, property, or even domestic items such as furnishings and appliances.
If you do nothing is after the IRS files a tax lien against you, the IRS can ultimately take your assets.
What next if a lien has already been filed?
For 15 years, our experienced and competent IRS tax attorneys have been assisting business owners and individuals find remedies to every tax issue you can think of. Our team of former tax lawyers is headed by an ex IRS attorney Mouris Behboud, who has worked for the government as an attorney for over 8 years. Presently he is passing this precious knowledge onto the private sector and to you. In case you are in risk of the IRS placing a tax lien against you, call us today to find out what options you have.