Understanding and Managing Tax Liens and Levies
Thank you for reaching out to Eddie Money Tax Resolution. I understand that dealing with tax issues can be overwhelming and stressful. I’m committed to providing you with the knowledge and support needed to navigate these challenges.
Understanding Tax Liens
A federal tax lien is the government’s legal claim on your property when you fail to pay a tax debt. This lien protects the government’s interest in all your assets, including real estate, personal property, and financial holdings.
The Tax Lien Process
- Tax Liability Assessment: The IRS assesses your tax liability through a filed return or a substitute return.
- Payment Demand: The IRS sends a notice demanding payment within 30 days.
- Unresolved Debt: If the debt remains unpaid, the IRS can file a tax lien.
The IRS files the lien with the office of the register of deeds of the county in which the real property subject to the liens is situated.
Impact of Property Tax Liens
A federal tax lien attaches to all your current and future assets while the lien is active. The notice of federal tax lien broadly covers all valuable property, such as:
- Accounts receivable
- Vehicles
- Future home purchases
- Homes, including vacation and rental properties
- Investment income
- Valuable personal items (e.g., jewelry)
- Securities (e.g., stocks, bonds, mutual funds)
How IRS Tax Liens Work
When the IRS issues a tax lien, your creditors are notified. While it doesn’t override claims from secured creditors, it takes precedence over unsecured debts like credit cards. In bankruptcy, secured creditors are paid first, followed by the IRS, and then other creditors.
Consequences of an IRS Tax Lien
A tax lien can severely impact your credit, making creditors see you as a high risk. This can lead to increased interest rates or reduced credit limits on existing accounts.
Checking for a Tax Lien
You can verify a tax lien by:
- Contacting the IRS Centralized Lien Department at (800)-913-6050.
- Checking with the office of the register of deeds of the county in which the real property subject to the liens is situated.
Appealing a Tax Lien
You can appeal a tax lien if you believe it is incorrect or if you’ve paid your tax obligation. You have 30 days to request a hearing after the IRS files a Notice of Federal Tax Lien.
Ways to Release an IRS Tax Lien
- A tax lien can be released through:
- Automatic payment agreements via streamlined installment arrangements
- Bankruptcy
- Execution of a collateralization agreement
- Expiration of the statute of limitations
- Full payment of the tax liability
- Purchase of a surety bond
- Successful completion of an Offer in Compromise
Payment Plans and Lien Withdrawal
The IRS will release a lien if:
- Your debt is $50,000 or less.
- You sign a Direct Debit Installment Agreement, committing to pay off the debt within the CSED (collection statute expiration date)
- You comply with other filing and payment requirements.
- You have made three consecutive direct debit payments.
- You haven’t defaulted on the current or any previous direct debit installment agreements.
What is a Tax Levy?
A tax levy is a legal process where the IRS or state tax authorities seize your assets to satisfy unpaid tax debts. The IRS and state can withdraw funds from your bank account, garnish your wages, and seize other assets.
IRS Procedures for Issuing a Levy
Before issuing a levy, the IRS must:
- Assess the tax and send you a bill.
- You must miss the deadline to pay your bill or arrange a different solution.
- The IRS sends a Notice of Intent to Levy, giving you 30 days to request a hearing.
Types of Intent to Levy Notices
- CP 504: Used when the IRS will levy your state tax refund. CP 90/CP 297: Informs you that the IRS may levy federal payments.
- 1058/LT 11 Letter: Lists your unpaid balance and impending levy.
- CP 91/CP 298: Specific to levying Social Security benefits.
How to Stop a Tax Levy
To stop a tax levy, consider:
- Proving financial hardship. Entering an IRS payment plan.
- Applying for an Offer in Compromise. Contesting the tax liability.
- Requesting Innocent Spouse Relief.
I hope this comprehensive guide helps clarify the complexities of tax liens and levies. Please don’t hesitate to reach out for a complimentary consultation to discuss your specific situation in more detail. We are here to lift this burden off your back and provide you with the peace of mind you deserve.
Phone: (856) 477-4357 | Email: eddiemoneytaxresolution@gmail.com
Service Areas: Wayne County, Michigan, Oakland County, 75 Radius Excluding Canada