The worst thing you can do when you get that dreaded back taxes letter from the IRS is to ignore it. But many people do ignore it for various reasons. First, dealing with the IRS can be scary, but there are other reasons too. Maybe you don’t have enough money to pay the debt off in full, or you may even hope if you ignore it long enough, it’ll just go away. We’ll be the first to tell you the IRS will not forget you owe them money.
Now that you’ve received the notice of a tax lien, what can you do?
The first thing you should do is hire an experienced tax attorney. You do not want to attempt to deal with the IRS on your own. There is a lot of paperwork that needs to be dealt with, and if you do it incorrectly, you’ll have to do it again.
Once you receive the lien, you may have questions such as:
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- What is a tax lien?
- How does the tax lien affect me?
- How can I prevent a tax lien?
- How long with it last?
- How do I resolve the lien?
- Do I need a tax attorney?
If you’re curious and want to know the answers to the questions above, continue reading below.
What Is a Tax Lien?
A tax lien is a legal document the government places against an individual or business when back taxes are owed. The main reason for the lien is to make creditors aware that the government has a legal claim to it. A lien doesn’t mean that the government now owns your home. You can still sell it if you make enough to pay off your mortgage and your tax debt. If you are unable to do this, you won’t be able to sell your home until the taxes are paid in full.
How Does the Tax Lien Affect Me?
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- It will negatively impact your credit.
- You won’t be able to get a loan.
- You’re going to have to spend a lot of time dealing with the IRS
- If you don’t deal with the IRS, they may impose a tax levy.
How Can I Prevent a Tax Lien?
To prevent a tax lien, don’t ignore the IRS. When you’re first notified that you owe money to the government, contact them immediately. If you can’t afford to pay them all at once most of the time, you can establish an installment agreement. This is when you agree to pay a specific amount of money per month until your debt is paid in full. Before contacting the IRS, you should get a tax attorney so they can deal with them for you.
How Long Does the Lien Last?
If you didn’t pay your taxes even after getting a lien placed on your assets, the lien would expire after ten years at the minimum. There are certain instances that liens can extend if you made an installment agreement, if you filed for an offer and compromise, or if the lien is refiled before the ten years is up.
The government may also remove the liens in the following circumstances.
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- Notice of deficiency
- Assets being seized by the court
- If the taxpayer lives out of the country for more than six months
- Due to wrongful seizure of the property
- The lien was filed by mistake
- The taxpayer claims bankruptcy
How Do I Resolve the Lien?
There are a few different ways you can resolve your tax lien.
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- Pay your tax bill – this one sounds the most obvious, and it is. But there are times when this is the only way you can resolve the lien. The best thing you can do is avoid the tax lien from the start.
- Set up a payment agreement – the worst thing about this is that you’ll still be charged interest and penalties until it’s paid off. If you owe a lot, it can be a substantial amount tacked on each month. If you opt for direct debit payments, they may withdraw the tax lien.
- Submit an Offer in Compromise – This is when you offer to pay off less than what you owe in taxes. This can be complicated because of all the paperwork involved, and you have about a 50/50 chance of being approved. If you are approved, you’ll have to make sure to file all your tax returns on time. You will not be accepted if you’re in the middle of filing bankruptcy or being audited. One thing to know about this is that in 2011 the IRS created the fresh start program. This made the offer in compromise more flexible. The criteria are less strict than they used to be
- File an appeal – If you want to view the lien or believe it was filed in error, you can file for an appeal. If you do think it was a mistake, make sure to file right away. Once filed, an agent will then review your account.
- Bankruptcy – this should be your last option. Not only is it time-consuming it may not always work. Even if you can resolve your lien, you’re going to have to follow many rules. Plus, your credit will suffer.
Do I Need a Tax Attorney?
The short answer to this question is yes. The main reason is it will help you feel more secure knowing a professional is handling the issue for you. Tax Attorney have specific knowledge in dealing with the IRS and are aware of all the tax laws. Not only can an experienced attorney help with your current situation they’ll also be able to help you with future ones.
Getting a professional to help with your tax lien is going to give you peace of mind for they will make sure all your paperwork is done right the first time. You won’t have to worry about having to resubmit the same paperwork repeatedly because you forgot something simple like the date. Plus, if you owe more than a few years of taxes it can become even more complicated and having someone on your side will help.
Tax Resolution Services Needed
The best thing you can do to prevent a tax lien is to pay your taxes. If you’ve been unable to pay your past due taxes and have been avoiding the IRS don’t worry, you’re not alone. There are thousands in the same boat. When you first start getting notifications from them you should contact a tax attorney immediately in order to resolve your tax issues.
Our Michigan Tax Resolution Law Firm can help you resolve your issues with the IRS including tax lien support. Our tax attorneys are experienced in all matters including tax resolution, tax dispute, and general issues relating to IRS tax and debt relief. With more than 20 years of experience brings knowledge and expertise in the local, state, and federal tax code so that your get the representation your need and deserve. Call for assistance today.
