A legal claim imposed on your properties by the Federal Government due to your inability to offset a tax debt is referred to as Federal Tax Lien. The interest of government is protected in all your fixed and financial assets.
It does not necessarily mean that all your fixed assets are seized or will be seized. It only means that the Federal Government gets the first right over others
There is no existence of tax lien until the Inland Revenue Service has assessed your liability and sent you a bill stating your debt.
After this, your failure to fully pay the debt establishes the existence of Federal Tax Lien. A public document filed by the IRS to the creditors that states the legal right of government over your fixed or financial asset is called the Notice of Federal Tax Lien.
The best option you have to get rid of tax lien is the full payment of your tax. Your Lien is usually released after 30days by the IRS after you have cleared your debt.
Other options for getting rid of lien when there is a win-win situation between the Federal Government and Taxpayers are as follows:
Lien is removed from a particular property via 'discharge'. You can seek the expertise of your tax preparer or find a tax preparer to guide and interpret provisions of the internal revenue code(IRC).
It necessarily does not have the lien removed but it gives other creditors leverage over the government which may empower you to access mortgage or a loan facility.
In this case, the Federal Tax Lien is removed and you have a guarantee that there is no further competition between the IRS and other creditors over your fixed and financial assets. This does not negate the fact that you are still eligible to pay the outstanding debt.
There are two additional withdrawal provisions:
The first option permit withdrawal after the release of lien. You will not be eligible for this option until you have satisfied your tax liability and lien released. Coupled with these, you have also filed individual, business and information returns for the past 3 years. Then, you are very current on your tax payment estimate and government tax deposits.
1. Fixed Assets: It will affect all your assets which will include securities, property, and vehicle. This does not exclude assets in the future that will be acquired during the lien period.
2. Credit: Once your lien is released, you cannot access credit facility.
3. Business: It affects all your corporate assets and account receivables.
4. Bankruptcy: Peradventure you filed for bankruptcy, the lien does not expire.
Pay all your tax in full and also on time. In a situation where you could not meet up with the above, always respond to all IRS correspondence.
A lien gives the Federal Government the first right over your fixed and financial assets while a levy pays the amount owed by taking your property.
A Tax Levy is an action that empower the IRS statutorily without court order to confiscate your fixed and financial assets so as to offset your liability.
While your accountant or tax preparer could guide you on how to remove your tax levy. Here are some DIY ways you could adopt in removing levy.
1. Full pay your tax debt by all means and at all cost.
2. IRS has just 10 years to pursue tax debt, if you are close, just wait out to have your debt cleared automatically.
3. You can create an installment settlement plan with IRS. Your commitment can keep your account levy-free.
4. Proof of physical circumstances by you to the IRS can enable pay installment plan partially.
5. An offer-in-promise is a very rare provision that can be considered by IRS. This can enable you to settle your amount owed fractionally.
6. If your asset lacks equity and you can prove it to the IRS, you may have your levy released.
7. If paying the tax will have a negative effect on your obligations at home and you can support this claim with proper documentation. IRS may willingly release your levy.
8. If you by chance quality for government bond, you can post it and make use of the money to offset your liability.
9. You have 30 days to appeal before a levy is binding.
10. File for bankruptcy. You can get all your debts cleared.
I hope you use the knowledge gained from this article to your advantage.
Key Tax & Financial Services, LLC