- Advertisement -
Friday, August 7, 2020
Home Money What You Need To Know About Tax Liens

What You Need To Know About Tax Liens

- Advertisement -

Tax liens and tax levies are quite hectic if you owe any back taxes. Here’s what you need to know about these tax issues and how you can actually remove a tax lien from your record.

What Is A Tax Lien?

It refers to a claim the government makes on your property if you are past due on payment of your income taxes. If you don’t handle a federal tax lien immediately, you could be slapped with a tax levy next. Here, the actual property will be seized to pay back the taxes owed. Note that, tax levies include garnishing of wages or asset seizing as well as frozen bank accounts.

RELATED POST: HOW YOU CAN CLAIM YOUR UK TAX BACK




ALSO READ: IMPROVE YOUR CLIENT SUCCESS SKILLS AT THE CS100 SUMMIT 2019 NEAR PROVO

How Can You Be Affected By A Tax Lien?

If you owe the IRS back taxes and are given a federal tax lien, here are some of the consequences that might befall you.

  • Negative Consequences On Your Credit Status – Note that, tax liens don’t appear on the credit reports. However, the IRS can file a public notice of the imposed tax lien. Therefore, all the creditors will know that the government has a right to seizing your property. It will affect your ability to get a loan. This post from Tax Crisis Institute goes in-depth into all you need to know.
  • Blocking Refinancing Or A Home Sale – During title searches, any tax liens imposed will be identified. If you own the house you are trying to sell or refinance, you might be forced to use your equity to pay your taxes so you can close any sale.
  • Time Wasting – If you have any back taxes, the IRS will funnel you into the ACS (automated collection system). Here, you will spend a lot of time on hold with the call center. In some cases, you might be assigned to a revenue officer, thus you would be forced to make visits in person.

ALSO READ: THE 8 MAJOR MORTGAGE MISTAKES TO AVOID

  • Tax Levy – After having a tax lien imposed on your property, the worst case could be a tax levy, especially if you don’t pay the overdue taxes.

Tax Levy

How To Get Rid Of A Tax Levy Or Tax Lien

If there is a tax lien or tax levy on your property, here are some of the best tips to get rid of it.

ALSO READ: WHY IT’S A GOOD IDEA TO HIRE AN ADVISOR AS AN ACCOUNTANT

1. Pay The Overdue Taxes – It’s an obvious solution but it’s the only way to remove a tax lien or levy. Simply put, you need to cooperate with the collection action. If they contact you, make sure you get back to them. Maintain constant communication to avoid any issues later on.

2. Get An IRS Payment Plan – The tax balance will continue increasing because of penalties and interest until you pay it off. However, you can agree to a direct debit installment where the IRS takes out at least 3 consecutive payments from your bank account. Next, you can allow the IRS to remove the tax lien from the public record but you still need to pay the overdue taxes. You can apply for the payment plan on the IRS website. The fees can be $0 or as high as $225, depending on the payment plan and your current income.

3. Request For An Offer In Compromise – Here, you will request to pay back the overdue taxes for less than the full amount owed. Of course, there are many terms and conditions and the IRS accepts very few of such requests. However, to be considered, you need to file all your current tax returns and make the estimated payments for that year. Your request will be denied if you are being audited or bankrupt.

ALSO READ: TIPS ON SURVIVING THE FIRST YEAR AS AN ENTREPRENEUR

4. Fill An Appeal – You can request for a hearing for the collection due from the office of appeals in the IRS, especially if you want the tax levy or tax lien to be reviewed. If you are in complete disagreement with the decision of an IRS employee about imposing a tax levy or lien, you can request a meeting with the manager of that specific employee as well as the office of appeals so they can review your case.

ALSO READ: A MEDIA AGENCY FROM KOLKATA, GIVING INNOVATION GOALS TO 4000+ BRANDS GLOBALLY

5. File For Bankruptcy – It’s not a pretty option but it might be the right way to get rid of any tax debt. Note that, filing for bankruptcy is a very long process and there are many rules in places. In some cases, it doesn’t work so you need to be prepared for that outcome as well.

In conclusion, you can always seek the advice of a tax expert to help you get rid of the tax lien or levy.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

blank
- Advertisement -

Stay Connected

Must Read

5 Best Investment Apps of 2020

Are you searching for the market’s best investment apps? Do you wish to build your career in trading? If yes, you need to handpick...
- Advertisement -

Four (#4) Types of Franchise Businesses

By definition, franchise businesses are all about following a reputed brand, using its methods of business, and paying a small fee to the “Franchisor”....

Does Network Marketing Really Work?

If there is a marketing model that has been around for decades, it would be network marketing. This marketing strategy is all about selling...

How Does iCloud Work? The Ultimate Tech Guide

Are you wondering how does iCloud work exactly? If yes, you should check out our guide here on the key things to understand. There are...

All Time Random Articles

30 Profitable Home Based Businesses

With the economy being what it is, layoffs all around us, and an increasing desire for many to escape the rat race and work...

Entrepreneurship is hard and it’s not for everyone

I’ve said it time and time again: Entrepreneurship is hard and it’s not for everyone. If, after taking a realistic personal inventory of who...

10 clues that it’s time to start your own business

Many budding entrepreneurs struggle mightily with that first step – out of their comfort zone and into the unknown. They keep asking people like...

A Quick Guide on how to invest in a Startup

There are so many stories of people making it big in the stock market. Some of the best companies in the world can make...

Keeping Your Project on Track Through All Weather Conditions

While there are numerous soil solutions that you could consider to keep your construction project on track through all weather conditions, the truth is...
- Advertisement -
Select Language »