Whenever you owe a debt you can’t pay, the organization or individual you owe will always try to collect. However, when it comes to collecting debts, the Internal Revenue Service has more power than most other creditors. Shortly after you fail to pay your debt, the IRS can begin the collection process by filing a federal tax lien against you.
This lien allows the IRS to begin seizing your assets, which are liquidated and used to pay the amount you owe. If you have a Las Vegas tax lien or tax lien elsewhere, it will also be detrimental to your finances in other ways, lowering your credit score and making it difficult to take out new loans.
What Is a Las Vegas Tax Lien?
As soon as the IRS realizes that you have an unpaid tax debt, they will send you a written notice in the mail. This notice will include the amount you owe, as well as any penalties or interest the IRS has added to your debt. The notice will also demand that you pay the full amount immediately. If you don’t pay what you owe by the specified date, the IRS will become more aggressive about collection.
When the IRS decides to begin collecting, they will file a Notice of Federal Tax Lien, which is a document that lets the public know that you owe a debt to the federal government. The purpose of this Las Vegas tax lien is to secure the government’s interest in your property until you pay the debt you owe. This lien attaches to all of your property, including your home, vehicles and any securities you own.
The lien will also appear on your credit report, which may lower your credit score and make it more difficult for you to qualify for credit in the future. If you buy new assets, the existing federal tax lien will attach to these assets as well. The lien will remain in place until your debt is paid or the statute of limitations expires.
If you have a Las Vegas federal tax lien, you will have trouble selling or refinancing any of your assets, such as your home. The federal tax lien will usually take priority over any other liens on the property, which means that the IRS has the first right to collect any time the property changes hands.
Getting Rid of a Las Vegas Tax Lien
If you have a federal tax lien in Las Vegas, getting rid of it as quickly as possible is in your best interest. The easiest way to get rid of the lien is to pay the full amount you owe to the IRS immediately. Because interest and penalties can accumulate on tax debt quickly, paying off the debt is usually the best choice even if you are forced to turn to credit cards to do so.
If you are able to pay the debt, the IRS will release the federal tax lien within 30 days of receiving payment. Unfortunately, many taxpayers with a Las Vegas tax lien aren’t able to pay what they owe, even with financing.
If you can’t pay your tax debt, you may be able to remove the tax lien from specific types of property through a process known as “discharge.” Discharging the lien will allow you to sell or refinance the property in question without worrying about the IRS trying to collect. However, the discharge process can be complicated.
A third way to get rid of a federal tax lien is through a voluntary withdrawal. This occurs when the IRS withdrawals its lien voluntarily. The IRS may withdraw an active tax lien if you have entered into an installment agreement with the IRS to repay the debt you owe. In general, the IRS won’t withdraw the lien until you have made three consecutive payments toward your debt. Other requirements also exist, so it’s wise to consult the tax relief professionals at Tax Samaritan if you are interested in solving your tax lien problem.
How to Avoid a Las Vegas Tax Lien
Having a federal tax lien affects your finances in a variety of ways. In general, it is best to avoid this type of lien if at all possible. To avoid a federal tax lien:
1. Pay your income tax in full and on time.
The best way to avoid a Las Vegas tax lien is to pay what you owe by the due date. Estimate the income taxes you will owe at the beginning of each new tax year so you can be prepared. If you are employed, have income tax withheld from your paycheck so that you don’t have to worry about paying it later. If you are self-employed, pay estimated taxes on a quarterly basis.
2. Start resolving tax problems immediately.
In some cases, you may end up owing taxes you can’t pay even if you try to plan carefully. As soon as you realize that you won’t be able to pay what you owe, start trying to resolve the issue with the IRS. A variety of different options are available to taxpayers who are having trouble paying their debts, including:
- Offer in compromise
- Installment agreement
- Penalty abatement
- Innocent spouse relief
Start looking into these options immediately so that you can resolve the issue before the IRS establishes a tax lien and resolution becomes more costly and complex.
3. Seek professional help.
If you are worried about a possible tax lien, seek help from a tax relief professional immediately. An experienced professional will be able to review the details of your situation and help you resolve it with as little trouble as possible.
Getting New Secured Loans with a Las Vegas Tax Lien
If you need to obtain a new secured loan while under a federal tax lien and you can’t eliminate the lien entirely, it may be possible to do so through subordination. Subordination is a process that allows other creditors to move ahead of the IRS in the collection hierarchy. If you are able to subordinate the IRS lien, it will be easier to get a new loan. However, your credit score may still be affected by the federal tax lien, which means that you may not get the best interest rate.
At Tax Samaritan, We Rescue Troubled Taxpayers
Click the button below to request a Free Tax Debt Analysis today to get started with the resolution of your Las Vegas tax lien and learn about your options.
Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US tax preparation and representation. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.
When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts). If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).
Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.