How to Better Understand an IRS Tax Lien Removal

Friday, January 8, 2021, 6:00 AM | Leave Comment

The collection of taxes in the United States was carried over from England. However, not in the way, it was done there: taxation without representation.

Through the 13th Amendment of the Constitution, the U.S. government has the ability to levy taxes to help pay for goods and services for the entire population. This is why you are asked to pay them each year.

Unfortunately, there are situations where you are unable to make payments to the Internal Revenue Service (IRS).

When this happens, the IRS penalizes you for non-payment. One way they do this is via a tax lien.

Here’s a bit more about this type of penalty and how an IRS tax lien removal is possible.

How to Better Understand a IRS Tax Lien Removal

  • What Does A Tax Lien Do?

    A tax lien is a way for the IRS to secure some form of payment toward your unpaid taxes. When activated, it’s attached to one of your assets. This can be your current home, your car, or other types of property. The IRS even connects a lien to an asset that you might purchase in the future.

  • How Does It Affect You?

    While a tax lien no longer appears on your credit report it does affect future purchases. You won’t be able to open any new credit card accounts or obtain a loan. You can’t sell your car or home because the titles for both are held by the IRS. In a worst-case scenario, your bank accounts are frozen.

  • How To Remove A Tax Lien

    Fortunately, this is not a final solution for the IRS to obtain owed taxes. There are companies across the country, like Enterprise Consulting Group, that help those who need to pay off their taxes to release the lien. Of course, paying it off in full is the best way for it to be removed. However, if that isn’t a feasible option at this time, then there are other ways to work through the issue.

  • Appeal the issue

    If you feel the IRS was wrong in placing the lien, you can request an appeal of the ruling. You can perform this task by yourself or request the help of a consulting group. Once they have all the necessary information they will negotiate a settlement for you.

    Reasons to appeal the lien include:

    • It was falsely filed.

    • The IRS didn’t follow proper procedures.

    • It has passed the 10-year statute of limitations on debt collection.

    • You didn’t have enough time to challenge the initial ruling.

    • The tax is owed by your former spouse.

  • Utilize the Fresh Start Initiative

    The Fresh Start Initiative is a chance for you to reach an agreement with the IRS that causes the tax lien to be withdrawn or released. This is for individuals who owe but have also filed taxes up to the time of application. Additionally, the amount to be paid needs to be $50,000 or less.

    When you complete the forms for the initiative you enter an Offer-in-Compromise (OIC) with the IRS to make regular payments automatically deducted from a bank account. Once agreed upon, the lien is released or completely withdrawn. As a result, your assets are thawed. This gives you a better chance of receiving needed credit. However, should you fail to pay, the OIC is invalidated and the lien is put back on your property.

    In the end, it’s best to be prepared to pay your taxes for any given year. While circumstances always arise, you should have the proper amount of savings to cover unforeseen expenses. If you can’t pay off the entire amount at the time it’s due, then you need to reach out to the IRS and start a payment plan. The more you pay each month the less interest that accrues. Furthermore, you minimize the risk of frozen assets.

    If a tax lien is inevitable, then seek legal assistance to avoid it or have it removed. Have all of your information organized so whomever you work with can quickly review the situation to determine what’s needed. Should the tax amount you owe be too great, then ask to apply for the Fresh Start Initiative. Overall, don’t panic. You can work things out with a minimum of stress.

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