TAX LIEN
A lien is a claim against your property. It’s not an immediate seizure, but it’s a claim that you owe money as a result of not paying the taxes you owe. A tax lien can be placed on your property by the IRS or your state government. Tax liens are also public announcements that you have an outstanding debt with the government.
Tax liens often represent the first option the IRS uses to collect a debt against you, but you have options for how you can approach or even release yourself from the lien.
A tax lien is a matter of public record, so you may be able to imagine the problems they can trigger. Specifically, tax liens can cause:
- Credit issues
- Interfering with your ability to obtain a loan
- Loss of personal property
- Damage to your future employment
- Disruption of potential business opportunities
IF YOU GET A LIEN ON YOUR PROPERTY
Receiving tax lien notices on your property is one of the scarier situations you may ever encounter in your dealings with the IRS. When you first begin receiving notices from the IRS or have an IRS Audit, notify your tax expert immediately. Tax liens don’t go away without the help of your tax accountant, who knows your finances better than anyone else. Your tax expert has the best chance of helping you keep your property.
If you get hit with a tax lien, you’ll likely receive numerous calls from companies offering to help. Be wary of these companies. Dealing with a tax lien requires an expert who not only knows your situation but understands the tax laws. The tax accountants have the experience and knowledge to minimize the consequences of a tax lien and legally avoid them altogether.
STATE AND FEDERAL TAX LIENS
State tax liens occur when you owe money to your state government. These liens vary from state to state. State tax liens have the reputation of being much more strict than federal tax liens. If you receive notifications from your state regulatory agency, it’s in your best interest to contact your tax expert immediately. It’s more likely you’ll lose your property or home with a state lien than with a federal tax lien.
IRS liens are debts that you owe the federal government. They differ from state tax liens in that the IRS is a little more predictable in how they deal with a lien. While federal tax liens can bring serious penalties, the IRS is often willing to work with you if you owe substantial taxes, especially if you have the help of a knowledgeable tax expert. The tax lien specialists have helped many of their clients save their property and reputations.
A LIEN ON HOUSE AND PROPERTY
Every state has tax laws that allow the regulatory agency to place a lien on your house in the case of delinquent property taxes. They’re more likely to do this than the IRS. Most state statutes place the priority of a tax lien higher than all other liens. If the property taxes remain unpaid for a long enough time, your state can hold a tax sale.
When this happens, your property address, the amount of tax due, and your name are listed publicly. Sometimes, your house can be sold or auctioned off to the highest bidder, depending on state laws. This isn’t just embarrassing either. Because everything’s done publicly, it can damage your future financial opportunities.
Fortunately, you have an option that may save your home, although it requires the assistance of CPAs with tax lien expertise. You may be able to object to all assessments, providing grounds for the contest. Two common grounds of the contest include:
- Proving that the lien exceeds your property’s taxable value
- Proving that the property has been disproportionately assessed
TAX LIEN REMOVAL
All tax liens are stressful situations. Remember that to the taxing authority — either the IRS or your state government — a tax lien is just a financial tool for leverage. If you’ve had a tax lien assessed against you, it doesn’t mean you’re necessarily going to lose your house. Stay calm, but talk to your accountant right away.
Explore every option with your tax expert and find solutions that may save your property, home, credit, business, career, and reputation. Some of the tax lien solutions that are available to you include:
- Discharge of property. IRS publication 783 discharges the lien, making it possible to sell your property free of the tax lien against it. You shouldn’t explore this option without the guidance of an experienced tax accountant.
- Lien release. It may be possible through different contests that your tax expert can release you of any tax liens, whether from the IRS or your state government. There are a number of ways this can be done, but all require the expertise of tax lien help from a tax expert.
- This option doesn’t remove your lien, but instead, it makes it easier for you to still get a loan or mortgage even with the current lien in place. By subordination, your creditors move ahead of the IRS in the debt pecking order, allowing you breathing room by expanding credit options available to you.
- This option pulls the tax lien notice from public record and prevents the IRS from competing with other creditors for your property.
- Paying the lien in full. Sometimes, the best option is to pay off the lien in full, but you still have options that minimize the overall financial impact to you. Your tax experts are able to set up IRS payment options so that you have fewer future financial troubles.
There are a number of options available to all taxpayers facing tax liens. A lien on the property isn’t the end of the world, but it’s a signal to take action. Contact your personal tax expert to explain your options and pick the best one for your specific situation.
