How To Avoid An IRS Tax Lien
IRS Tax Lien
A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets.
Federal Tax Liens can really make your life miserable! The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.
An IRS tax lien is a powerful tool at the disposal of the IRS and the lien can be against you, your spouse, or your company. A lien against your company would seize your accounts receivables. At this point everything you own is just one short step away from becoming the property of the United States Government.
How An IRS Tax Lien Affects You
- Assets — A lien attaches to all of your assets (such as property, securities, vehicles) and to future assets acquired during the duration of the lien.
- Credit — Once the IRS files a Notice of Federal Tax Lien, it may limit your ability to get credit. The tax lien show up on your credit report and often prevent you from opening a checking account or borrowing against any assets, like your home. The banks don’t want the extra work when the IRS comes in to take your money.
- Business — The lien attaches to all business property and to all rights to business property, including accounts receivable.
- Bankruptcy — If you file for bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien may continue after the bankruptcy.
How To Avoid An IRS Tax Lien
You can avoid a federal tax lien by simply filing and paying all your taxes in full and on time. If you can’t file or pay on time, don’t ignore the letters or correspondence you get from the IRS.
Liens can also be prevented by setting up an installment agreement that meets the IRS requirements to avoid filing a lien. The IRS will not file a federal tax lien if a taxpayer sets up either a guaranteed installment agreement or a streamlined installment agreement.
An IRS Tax Lien Vs. Levy
A tax lien is not a levy. A lien secures the government’s interest in your property when you don’t pay your tax debt. Whereas, a levy actually takes the property to pay the tax debt. If you don’t pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell any type of real or personal property that you own or have an interest in.
With a Federal Tax lien on your record you can’t get a reasonable loan to purchase a car. Think about paying 18-22% interest on a car that is already too expensive. You definitely cannot buy or sell any real estate. The list is endless.
With Tax Samaritan as your representative, it is our job to make sure that all proper procedures have been followed by the IRS and to evaluate options to resolve your tax debt.