When you owe tax money to the government, the IRS, as the legal authority responsible for taxes, is tasked with collecting debts from taxpayers. There are many tools for the authority to do so, and one of them is a federal tax lien, which gives the government a legal claim against your property. In this article, we’ll take a closer look at what is a tax lien and how to deal with it when you’re facing one.
What Is a Federal Tax Lien?
A federal tax lien is the government’s legal claim against a taxpayer’s property. It includes everything, such as properties, real estate, bank accounts, and other financial assets.
When Does the IRS File a Tax Lien?
A tax lien arises automatically under federal law after:
- Tax debt is assessed,
- The IRS sends notices and demands payment,
- Individuals and businesses fail to settle their tax balances.
What Property Can a Federal Tax Lien Affect?
Real Estate
Tax liens can be placed on real estate, including residences, commercial properties, land and investment properties.
Personal Property
A federal tax lien also covers all personal property like cars, household goods (furniture and appliances, and valuables (jewelry, art, electronics).
Financial Assets
Financial assets like bank accounts, retirement accounts, investment accounts, and future income, such as business receivables, can all be subject to a federal lien.
How Do You Know If You Have a Federal Tax Lien?
IRS Notices and Correspondence
As part of the initial step, the IRS sends several notices, with each subsequent letter becoming more urgent and carrying more weight. Typically, these letters are sent to inform taxpayers of outstanding debts, how to pay, and the payment due date. Failing to respond on time can result in the IRS filing a Notice of Federal Tax Lien, which is a public document that alerts creditors to the government’s existing legal claim against your property.
Reviewing IRS Account Information
Log in to your IRS account and check for notices received. Taxpayers can also check whether a Notice of Federal Tax Lien has been filed by visiting the county or state recording offices.
Seeking Professional Guidance
Going to a professional, such as a tax attorney, can help verify any doubts regarding the existence of a federal tax lien. Moreover, they can provide accurate information about liens and the options available for you to take.
Can a Federal Tax Lien Be Removed?
Lien Release
A lien release can be done in two ways. First, once the tax debt is fully paid or otherwise satisfied, the IRS generally issues a Certificate of Release of Federal Tax Lien within 30 days. Second, the IRS has exhausted its legal collection period (typically ten years). In these cases, the IRS no longer has the ability or reason to keep the lien in place.
Lien Withdrawal
A lien withdrawal removes the public Notice of Federal Tax Lien from the public record. Although the underlying tax liability may still exist, the IRS is no longer publicly asserting its lien through the recorded notice. A lien withdrawal can occur when the IRS files it prematurely, when administrative rules are broken, or when you enter into a qualifying agreement with the government.
Certificate of Discharge
A Certificate of Discharge is issued for specific properties, such as houses for sale, in which the IRS receives a fair share of the proceeds to repay the debt. In this case, taxpayers may still owe money, and liens are still active. However, only liens on one or more of the assets are discharged to satisfy the debt.
Certificate of Subordination
With a Certificate of Subordination, other creditors or lenders take precedence over the IRS in order to give loans to the taxpayer to pay off tax debts. This is only done when the IRS believes that this option will allow the debt to be paid off faster.
How Greenberg Law Group Helps Taxpayers Resolve Federal Tax Liens
Evaluating IRS Collection Options
When a taxpayer faces serious tax problems, such as receiving a Notice of Federal Tax Lien, the next steps are make-or-break. There will be options available. However, choosing which options to take can be tricky, and selecting the right one is paramount to desired outcomes. Greenberg Law Group can help evaluate your situation and recommend options suitable for your unique issue, bringing you closer to resolving it effectively.
Negotiating With the IRS
Part of dealing with tax issues is negotiating with the IRS. Greenberg Law Group has expertise and experience with negotiating with the IRS on behalf of our clients. From negotiating payment arrangements to settlement opportunities to collection alternatives, all communication with the IRS will be conducted properly, ensuring the best tactics are used with your best interest in mind.
Protecting Taxpayer Rights
When working for our clients, Greenberg Law Group provides full guidance throughout the IRS resolution process. Given the intricacies of tax regulations, Greenberg Law understands that the journey to resolving tax issues can be long and challenging. We work to ensure not only that results are as close as possible to taxpayers’ desires, but also that we are present every step of the way, maintaining professionalism and protecting your rights throughout the process.
Assisting Florida Taxpayers
Greenberg Law Group P.A. is experienced in handling federal tax issues and IRS disputes for Florida taxpayers. With a dedicated tax attorney with over 20 years of experience, Greenberg is well-suited to provide personalized, localized defense for taxpayers facing aggressive government collection actions.
End Note
A federal tax lien is not something to take lightly. The consequences of a tax lien can be severe for your financial health and cause a lot of stress. Therefore, if you are experiencing a federal tax lien, resolve it immediately- the longer you wait, the more complex it will be.
Greenberg Law Group P.A. is an experienced tax law firm that knows what steps to take to effectively deal with a tax lien. Don’t let tax problems devastate your life. Prevent the worst by acting now. Contact Greenberg Law Group P.A. today.