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Articles Posted in Tax Liens

Suddenly, your nightmare has become a reality – you owe the IRS money, and they’ve placed a lien on your property in order to recover those funds. They’ve sent notices informing you of the lien (or liens) and stated the reasons for these impending penalties. At this point, two different options are on the table – either you satisfy your debt and file to remove the lien, or for one of several very particular reasons, if the lien is not valid, then you must file to have it withdrawn or removed. In both cases, you need to seek professional help to file the proper forms and monitor the IRS’s responses. After all, tax lien removal is never as simple as it sounds. Confused as to next steps? Let’s start at the beginning.

Liens Versus Levies

What’s a tax lien versus a tax levy? The two are tools used by the IRS in order to collect funds from taxpayers who owe them money. However, there are some drastic differences between the two options. A tax lien is very much like a judgement. It’s public record, so anyone find out that you owe the IRS money once the lien if filed.  It’s mainly there to let other creditors know that the IRS has claim against your property.

Did you just receive a letter in the mail from the IRS stating their intention to put a lien on your assets? Then you need to request collection due process hearing representation. When you owe money to the IRS, whether it is due to years of unpaid taxes or a mistake that was made on your tax returns which led to a failure to disclose all of your income (or any other reason for that matter), they will take whatever steps are necessary to ensure that they receive the funds owed to them. In most cases, this is process begins with a written notice. So, what should you do when you receive one? And what possible options are at your disposal? Let’s dive into an in-depth look at the process and what options are available.

When the IRS Believes You Owe Them Money

Sometimes, errors occur on tax forms that are not caught before they are submitted. For instance, if your wages were not properly disclosed on your yearly return, you may owe money. On the other hand, the IRS can also make mistakes. Though not often, this does happen, and it usually does not turn out in your favor because they now think you owe them back taxes and want to collect. No matter the reason, when a discrepancy is found, a notice will turn up in your mailbox from the IRS. They may plan to place a lien or levy on your home or business, your vehicles, your bank account, or even your future paychecks. This kind of notice is not ideal, but it happens more often than you think, so do not panic.

The IRS has authority to take certain actions to recover unpaid taxes from individuals and businesses, provided it has given sufficient notice. Some confusion exists over the difference between two tactics that the IRS may use: a federal tax lien and a federal tax levy. The key difference is that a levy involves an actual seizure of property, while a lien is merely a claim on property because of an unpaid debt. The IRS must provide taxpayers with notice before levying property or filing a lien. In either case, the taxpayer may request a hearing to dispute the IRS’s determination.

Federal Tax Liens

A “lien” is an interest in property by someone who does not have the right to possess that property. Mortgage liens are a common example. When a person takes out a mortgage to buy real property, the mortgage lender typically has a lien on that property until the mortgage loan is paid in full. The document creating the lien is filed in the public record and serves as notice that the mortgage lender has a claim on the property. If the owner defaults on the loan, the lienholder can recover the debt through foreclosure. If the owner sells the property without paying off the loan, the lien remains attached to the property, along with the right to foreclose.

A federal tax lien is not attached to a single piece of property. It attaches to any property owned by the taxpayer, including a home or other real estate. A tax lien also covers automobiles, securities and other financial assets, and personal property. Tax liens often have priority over other liens, meaning that it gets paid before other debts.

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