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What Is An IRS Or State Tax Lien?

A taxpayer may have a situation in which he or she ends up owing taxes to the state or to the Internal Revenue Service. The person may owe state taxes because of failure to pay state income taxes, or the debt could come from property taxes. IRS debts can accrue for a number of reasons. One reason that a person may owe the IRS taxes is failure to pay income taxes. The IRS may also find a discrepancy in the person’s taxes and issue the individual a notice of owed monies. A spouse’s child support may end up causing an injurious debt to the other spouse, as well. All those situations may cause the organization to impose a tax lien after a certain amount of time.

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More About Tax Liens

A tax lien is similar to the way it sounds. It is a situation in which a governmental entity places some weight on or “leans” on a taxpayer’s personal property. The governmental entity imposes the lien to ensure that it receives the funds that the taxpayer owes. The taxpayer cannot sell the property or do anything else with it until he or she repays the debt. The property that the government uses to place the lien on can be a home, car or some other form of personal property. The governmental entity will use whatever property can liquidate the fastest.

How to Avoid a Tax Lien

The best way to avoid having a tax lien placed on one’s property is to stay in touch with the IRS. The IRS gives a taxpayer ample time to resolve a past debt. First, the IRS sends a letter to let the person know about the debt. The first letter is a courtesy letter and an invite for the person to resolve the matter. The person generally has about 30 days to respond to the letter. The IRS has been known to be generous about payment arrangements, and they are willing to approve them in most cases. The taxpayer has to ask for arrangements to get them, however. Continuous failure to respond or work out an arrangement will result in the issuance of a lien.

How to Settle a Tax Lien

A taxpayer can use several approaches to settle a lien. Paying the amount in full is, of course, the best course of action to take. The taxpayer can complete paperwork and request that one piece of property be removed from the lien. That property may be a house or a vehicle. The person must complete a certificate of discharge form and have it approved by the IRS. Another thing that the taxpayer may do is request a subordination. A subordination doesn’t remove the lien, but it does allow the consumer to put the other creditors such as financial institutions ahead of the IRS so that the person can get personal loans and credit items. A consumer may wish to file for subordination to try to get a consolidation loan or something similar.

Finally, a person can apply for a lien withdrawal. The IRS may oblige if the person agrees to sign up for installment payments using a debit card. The taxpayer must owe less than $25,000 to gain approval for that situation.

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Tax Lien Attorney

An experienced attorney can help a person to overcome a tax lien situation. The attorney can negotiate with the issuing organization and try to bargain with that organization in the taxpayer’s behalf. A taxpayer must take action quickly after receiving a notification of a debt. What many tax payers don’t realize is that they ONLY need a tax attorney if they have a criminal case with the IRS. Attorneys tend to be very, very expensive.

A much more affordable option when you don’t have a criminal case with the IRS is to have tax representation done by a tax resolution company. A good tax resolution company can represent you with the IRS and New York state. They should be able to negotiate on your behalf and get your debt owed reduced, in some cases completely eliminated, and get payment plans that you can afford.

If you’d like to know more about how we can help you resolve your tax problem, call us for a FREE Tax Help Consultation at (855)829-8477.

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