Tax Law Los Angeles
A federal tax lien from the IRS is bad news. It means an individual has defaulted on their taxes, and the IRS has claim on that individual’s assets, including money, home, an automobile, or about anything else that you own. For many, the words ‘tax lien’ is the most terrifying phrase in the English language
The phrase tax lien release – despite containing those two terrifying syllables – is actually a cause for celebration, once you understand what they mean, and what to do them.
To understand fully the function of a tax lien, first we must fully comprehend what a tax lien is, and what it does.
A tax lien is a legal claim from an official government entity taking action against a taxpayer’s assets who has failed to pay their taxes. Liens are a last ditch effort, forcing an individual or organization to pay the back taxes they owe. To have a lien withdrawn, the noncpompliant taxpayer must pay what they owe, getting the debt dismissed in bankruptcy court, or negotiate with the IRS for an offer in compromise. Governments may place liens for errant state or federal income taxes, while local governments may place liens for local income or property taxes.
This means that the IRS has legal claim to every single asset, as well as future income, until the lien has been released
As always, tax liens are best to be avoided, if at all possible. If you have not yet defaulted on your taxes, it is in your best interest to work something out, usually in the form of an agreement with the IRS
The two most common forms of agreements with the IRS are:
Installment agreement options are usually more feasible than the other prior methods.
In the off chance that, due to extenuating circumstances, the IRS placed a tax lien against your property, you will have to go about having a tax lien released, once your back taxes are back in good standing.
The first, and most common, way to have a tax lien released is by paying your back taxes, in full. The IRS will release your tax lien after 30 days from receiving your payment.
Some other forms of tax lien release exist, including:
A withdrawal removes the Notice of Federal Tax Lien from your public record and makes sure that the IRS is not in competition with other creditors for your property. You are still liable for the amount due, however.
A withdrawal is not the same as a release, although they are involved with one another. A release means the tax dispute has been resolved. A withdrawal means credit agencies delete any reference to the tax lien when they see it.
Some causes for withdrawal include:
Obviously, a withdrawal is preferable to a release, particularly for small business owners, or when obtaining a loan.
Remember, if your tax lien has not been withdrawn, it will fall off your credit report after the statue of limitation has expired, in seven years’ time.
There are numerous ways to get a tax lien released, even if you are not yet in a position to pay back your taxes fully. There are more ways than ever before, in fact, after the IRS issued a series of initiative to help get taxpayers back on their feet. A trained tax professional can negotiate with the IRS for a variety of solutions, including: