Tax Debt Notice

What is a Tax Lien?

Once your tax debt is determined, the IRS will send you a notice or bill stating that you owe an unpaid tax debt. A bill or notice will be received for each year that has a balance. This notice will also demand for payment of the taxes that are due, within a short time. Once this notice has been issued to you, the IRS can file a tax lien if you neglect or fail to pay the tax debt timely. A Notice of Federal Tax Lien is a document filed with the county office that states what tax debt is owed by a taxpayer. Filing the Notice of Federal Tax Lien confirms first rights against other creditors to your property.
IRS Tax Liens

 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.

IRS Tax Liens
Tax Liens Appeals

What Is a Tax Lien Appeal and What Is Involved?

When the IRS files a Notice of Federal Tax Lien, you have the right to appeal this decision. Your appeal rights will be included in the notice. To request an appeal, a Collection Due Process, Form 12153, must be filed timely. The standard time to file this request is within 30 days from the date that the notice was issued. There are many factors that can take place which would prompt you to appeal the lien filing decision. If you paid the tax in full then you can appeal the lien being filed.

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.

Tax Liens Appeals

Can an Appeal be filed?

When a lien is filed on your assets, the information regarding the amount of tax debt you owe is now public records and visible by any credit reporting agency. It will negatively affect your credit score and limit your ability to get a loan or a credit card. Most people are unaware that having a tax lien on your credit report can be like filing bankruptcy or having a judgement filed on you. These are very negative impacts to your score. Under normal rules, unpaid tax liens are meant to stay on your credit report forever. However, credit reporting agencies may remove them after about 10 years.
IRS Tax Liens

 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.

IRS Tax Liens

What about your Assets

A lien is not a levy. A lien secures the IRS’s interest in a taxpayer’s assets when they don’t pay their tax debt. When you ignore the lien filing it can only make things worse. Filing a lien means that a levy will be the next step for the IRS to collect the past due tax debt. When a levy is issued, it will officially take your asset to pay the tax debt. A levy can involve taking funds from your bank accounts or garnishing your wages. This is in addition to seizing your personal property or assets. A tax levy is not public record and will not affect your credit score in the way that a lien will.

 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.

IRS Tax Liens

What defines Lien Subordination

A lien subordination is done when a taxpayer is wanting to refinance, sell, or use an asset as collateral for a new loan. This is the most common way for taxpayers to realize they have a lien. When you have an application for a loan, realize you have a lien and need to remove it you must request so 45 days before closing. If you try to sell or refinance an asset with a tax lien and it is discovered by the agency late, your process will be delayed greatly. It is best to get a head start when dealing with a lien subordination as it is a timely process. When requesting subordination, it means that the IRS will allow a creditor to move above them.

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

A lien discharge is done when a taxpayer is selling an asset. If approved, the IRS will no longer hold any legal right to the asset they just discharged. The asset must be for sale and the discharge will take place in order for the sale to be completed. Keep in mind, A federal tax lien will still be in effect on the rest of the assets listed. It will just be removed from the one for sale. You will still be responsible for paying the tax debt even if they discharged the lien. A Lien discharge request can be filed by using Form 14135, Application for Certificate of Discharge of Property from Federal Tax Lien. Once approved, the IRS will issue a Conditional Commitment Letter.
IRS Tax Liens

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

A lien withdrawal is done when the taxpayer is on a Direct Debit Installment Agreement to full pay the tax debt due within 60 months. Additional rules for a withdrawal are that a taxpayer owes an assessed total of $25,000.00 or less and has had three payments directly debited. If you have defaulted an Installment Agreement in the past, you may not be approved for the lien withdrawal. A withdrawal is different than a lien being removed due to full payment, or a lien being subordinated or discharged.
IRS Tax Liens

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.

IRS Tax Liens

A Lien Can Affect You Getting A Job

In rare instances, a lien can affect a taxpayer’s ability to keep or secure a job. Remember that liens will be visible to creditors and on your credit report. If you are seeking a job where they must run your credit report, then you will be hindered. If this is the case, the IRS may release a tax lien. Each case is considered individually, and all depends on exact facts. By releasing the lien, you will now have a better chance to get the job. The reason the IRS would agree to this is because you will now produce an income.

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

An Offer in Compromise is a tax debt settlement program. This program Is separate from any lien removal requests. Once an Offer in Compromise is approved, you will be held to a specific payment plan to pay off your total offered amount due. The offer amount is usually a drastically reduced amount from the total tax that is due. Once your payments are made in full, any tax liens will be removed. There are two other common results that can be made on your account to avoid the IRS filing a tax lien at all. Of course, the most common way to prevent a lien is to pay the tax in full before it is filed.
IRS Tax Liens

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.

IRS Tax Liens
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Client Safety Is Our First Priority

Assisting a client with removing a tax lien is very case specific and depends on the needs of the client. When looking into removing a lien, the assets you own will also play a huge factor. The lien subordination and lien discharge requests require that A Form 14135 is filed. Along with the request a list of supporting documentation, which is detailed on the form, must be submitted at the same time. Examples of the documentation needed are such items as sales contract, appraisals, title reports, and HUD Statements. Just because an application is sent does not mean that the taxpayer can go ahead and refinance or sell their property.

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.

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