What is a Tax Lien?
A Lien will also secure that the IRS has legal right to any funds or value of your property and other assets. When Lien priority is proven it will assist in the decision of who gets paid and in what order, upon the sale or closing of an asset. The lien attaches to all assets owned such as property, securities, and vehicles.
What Is a Tax Lien Appeal and What Is Involved?
Its standard to file an Appeal if your collections statute date expired, you are filing bankruptcy or if the IRS made an error in the lien filing process. In our experience, there are plenty of times where the IRS fails to send you a notice before placing the tax lien. If this happens to you, you can usually get it removed. The IRS has a five-day period to notify you with the Notice of Federal Tax Lien and Your Right to a Collection Due Process Hearing before the lien is filed. Having a tax expert on your side that knows your rights when it comes to the dos and don’ts of a lien filing can benefit you in the future. Liens are something that can haunt your life and make it hard for you to be financially secured.
Can an Appeal be filed?
If the tax lien has been paid in full, the credit agencies must remove the lien no later than seven years from the date it was filed. Occasionally even if the tax lien amount has been paid in full. the IRS overlooks releasing the lien. It is best for you to actively stay on top of your credit score and order reports from all three credit bureaus – Experian, Equifax and Transunion if a lien has been filed against you. It would be easier for you to obtain your credit reports to check the status of lien rather than calling the IRS.
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Sometimes this may cause a trigger a more in-depth problem that you are not aware of, such as additional balance owed. If that happens you should seek help from a tax professional especially if you are unaware of the rules with tax liens. Having the expert help on your side can help guide you to restore your credit and protect your assets. Trained tax experts can also be helpful in addressing any additional problems that may come about. They can also assist you in the process of filing forms for the many lien removal programs the IRS offers.
What about your Assets
If you don’t pay or plan to resolve your tax debt, the IRS will try to secure payment through these aggressive methods. You will be sent numerous notices before this action occurs, it is important to respond to the IRS timely and not ignore the tax debt. Ignoring the matter at hand will only make the IRS attempt to collect the debt owed in more than one way.
Once a lien is placed on your assets or appears on your credit the first question that comes to mind is how and when can this lien be removed?
A lien can be removed for many different reasons. The easiest way to remove a lien is by full paying your tax debt. Once the IRS receives the full payment, it removes the lien within 30 days. A lien can also be removed by applying for a few different lien removal programs. The three programs are a lien subordination, a lien discharge, or a lien withdrawal. These requests only apply in certain cases. Each program will require a written request be made to a specific office. To determine the office to send the request to will all depend on which State the property is located. Requests of this nature can take at least 90 days to complete, so it is important that the paperwork is filled out and sent as quickly as possible.
What defines Lien Subordination
They will no longer have priority to any funds that are received. By this switch you are able to refinance an asset and obtain the proceeds. This will give you the chance to appropriate the funds where they are need without having to forfeit them in full to the IRS. When receiving funds, you are still required to make a large payment to the IRS with the proceeds. Keep in mind that with a lien subordination, the IRS will not be removing the lien. They will just be moving their spot on the lien to second instead of first. A complete list of documents must be provided to the IRS when making this request. You may have to provide an application showing the type of lending or refinance you are about to sign. By showing the IRS you are in an open process, it may help speed along their ruling.
The Affects a lien can have on you
This letter will be good enough to verify the lien removal and complete the sale. Once in receipt of the funds from the sale of the asset, the IRS will discharge their tax lien completely. This is done so that the new buyer can have a fresh title for their newly bought asset. Most real estate sales require the request be done at least 60 days before the sale. In some cases, a lien discharge may allow you to avoid foreclosure also. If in foreclosure, there is a section on the request form where this can be indicated. The IRS will usually review requests based on specific cases. Each case must be approved by an Advisory Group Manager.
A Lien Withdrawal
This request can be done based on the fact that you are showing compliance to pay the income taxes owed. A withdrawal removes the public Notice of Federal Tax Lien; however, you are still liable for the tax amount due. You must maintain all monthly payments even after the lien is withdrawn. If the Installment Agreement defaults, the lien can be filed again later.
A Lien Can Affect You Getting A Job
This will be in the best interest of the IRS in order to collect the tax debt due. Without income, you are more than likely not going to be able to afford to pay anything toward the past due taxes. Whereas you may qualify for a currently non collectible status the IRS would rather receive a monthly payment.
Offer In Compromise
However, the IRS will not file a lien if you set up either a guaranteed installment agreement or a streamlined installment agreement. Rules of a guaranteed installment agreement is that the tax debt balance must be $10,000 or less. The agreement must full pay the balance within 36 months. The rule of a streamlined Installment Agreement is that the balance must be $25,000 or less. This type of agreement must be paid in full within 60 months and set up on a direct debit. This will mean that you submit Form 433-D, Direct Debit to the IRS and authorize them to debit the monthly payments from your bank each month.
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They need to wait for approval from the IRS first. This will come via the Conditional Commitment Letter. The letter will contain the approval details, such as what funds they are expecting and there will be a request for the copy of the final HUD Statement and recorded deed. The taxpayer is typically given 30 days to supply this data to the IRS representative. If you fail to meet any deadlines given to you then you can jeopardize the processing of your request. Once this information is received, another letter will be sent out confirming the receipt of the documentation. Once they receive the documents you will need to allow time for them to review everything along with the request. If the request is granted, the lien will be removed. This can take an additional 30-45 days to occur. This is why it is very important to make sure that enough time in advance is given.
The Removal Process
The desire to get the tax liens removed is one of the most common areas that our clients are interested in. A tax lien cannot only hinder the purchase and sale of assets, it can cause embarrassment to the taxpayer as it is public record. The Tax Lien removal rules and programs are so complex that if you are not well educated or well prepared it can easily become a nightmare. Here at Omni Tax Help we are experts at dealing with liens. It is a comfort to know that you will be able to face the process of a tax lien or levy with confidence. Having an experienced tax expert on your side can only increase the chances of approval. If you have been notified that either a levy or lien has been placed against you, the time to address it is now. There is a limited amount of time that you have to file Appeals. Hiring the most reliable firm is the first step to getting your life back in order.