If you owe the Internal Revenue Service a large amount of money from previous tax years, and have not answered correspondence or started a payment plan, you may end up with a lien on your property. If this happens to you, consult a professional from the Professional Accounting Center, Inc. of Owing Mills, Maryland to find out what steps you can take to have the lien removed.
A lien is the last step the Internal Revenue Service will take before seizure of property or assets. The IRS can only resort to a lien if you receive a notice of the debt, and are followed up with a bill. The lien protects the government’s interest in all your property as collateral for the debt, including real estate, personal property and financial assets. A Federal tax lien is a public record indicating that you failed to pay your Income Taxes. This allows the IRS the authority to garnish any income made concerning your property up to the amount of your debt when you sell your personal property. A lien is a serious item on your financial records, and any financial institution or public office will be aware of this debt. Any money that you are owed by a company, person, or institution will instead go directly to the IRS.
Let’s say there is a Federal tax lien on your home. You will no longer be able to sell, or even refinance your home without the funds owed going directly to the Internal Revenue Service. The only way that you will be able to once again sell or refinance is to settle your debt. If you have equity in your property, the IRS will take the funds needed in order to pay the tax lien out of the sales proceeds at the time of closing. . Very rarely, the IRS may release a lien if that will speed up the collection of tax or is in the best interests of the taxpayer and the government. If the home is sold for less than what you owe, you can request that the IRS remove the lien until the sale is completed. Alternatively, you can ask the IRS to make the tax lien secondary to the mortgage company’s lien so that you can refinance. This can be a somewhat lengthy process, however the official website of the Internal Revenue Service states that they are currently trying to speed up these requests due to the nature of the economy. The IRS is also planning to increase the threshold for the amount of money owed that will allow or encourage the placement of a lien. The IRS website states that the current numbers do not correspond with inflation, and that they are planning to revise these numbers within a year. Currently, if you reach a certain amount owed to the IRS, a lien is automatically filed. The IRS is looking to raise that amount in accordance with the current economy.
The best action concerning tax liens is to proactively pay your balance when you first receive notification, preventing the placement of a lien. When you file your taxes, if a balance is predicted, make sure your contact information is correct and up to date so you do not miss any reminders from the IRS to pay this debt. If you find yourself the recipient of a lien on your property, contact the Professional Accounting Center, Inc. to consult you during the process. Next, find out the cause of the balance that is owed to the IRS. If you have received a lien, you most likely will not be within the statute of limitations to fight the balance if it is unfounded.
The easiest way to settle your balance is to set up a payment plan you are comfortable with in order to pay the IRS. You must pay the balance in full or set up a guaranteed arrangement before a lien is removed from your record. After the balance is settled, you will file a request with the Internal Revenue Service to have the lien lifted. Keep receipts or a letter if you wish to request that the lien be removed from your credit report. When the IRS releases a lien, the county records are updated so you are no longer responsible for the lien. Liens are released within 30 days after the full payment to the IRS is received. If you set up a guaranteed payment agreement, the lien is also released within 30 days.
A Tax Lien can be extremely detrimental to your credit, and can stay on your credit report for up to ten years. However, the IRS is currently modifying the guidelines that will make it easier for you to obtain a lien withdrawal. The mentioned upcoming changes to the IRS tax lien guidelines are a result of the “Fresh Start Program”. This program will hopefully allow taxpayers more leeway in paying their federal debt, decrease the severity and frequency of federal liens, and taxpayers with existing liens may be eligible for withdrawal of that lien if their outstanding balance is under $25,000.
If you are ready to settle your balance, you can call the Professional Accounting Center, Inc. of Owing Mills, Maryland to prepare your payment plan. Click the link below to speak to one of the experts.
Margaret Tabb