A federal tax lien can be defined as "A federally authorized lien against any and all assets of a taxpayer who has unpaid back taxes. The lien allows the Internal Revenue Service (IRS) to secure or otherwise requisition the taxpayer's property in order to secure payment. Federal tax liens can be assessed for unpaid taxes of any kind, including income, self-employment, gift, estate or payroll taxes". What this means to you as an individual is that once a lien has been applied against you the government has a legal claim to your property, which can include real estate, personal property and financial assets including accounts receivable, investments and retirement accounts.
What Are the Steps Towards a Federal Tax Lien?
In order for a federal tax lien to be processed for an individual or a corporation, the IRS must go through a few steps to determine if an individual deserves a lien. These steps are: assessing the tax liability, sending a notice of a bill and demand for payment. Should you neglect to pay the bill; the tax lien will then be filed against you. Once the tax lien is implemented against you or even before it is, it is important that you contact a licensed tax professional to help you understand the effect of having a federal tax lien filed against you can do to your future credit rating, ability to borrow monies and/or your employment prospects.
Options on How to Rid Yourself of a Lien
Once a lien has been filed against you, it is important to that you pay off the debt in full as soon as possible, if you are able to do this, the lien will be lifted within 30 days by the IRS. If you don't have the option of paying off your debt in full when your first receive the lien do not worry, as there are several other options that you and your licensed tax professional can consider. The first option is to request a certificate of discharge of your property. This option allows you to sell your property free of the lien, and in turn pay off some or all of the debt that you may owe. The second option is to file for subordination, which essentially allows you to move other creditors ahead of the IRS in the hopes that you can get a loan or mortgage to help pay off the federal tax lien that has been applied to you. The third option that is available to an individual or business that has a tax lien is applying for a withdrawal. What this does is it removes the lien entirety from you and assures that the IR
S is not competing with other creditors for your property. Lastly, you can file an appeal if you feel the lien was filed incorrectly.
How Does a Tax Lien Affect Me?
As stated above, the federal tax lien attaches to all of your real and personal property, including financial assets. The lien will harm your credit score and may prevent you from obtaining bank loans or even harm your employment prospects. Filing for bankruptcy will not remove a tax lien as well.
It is important to note that should an individual ever find themselves in the predicament of a federal tax lien that they contact a licensed tax professional and set up an appointment and consultation as soon as possible to discuss the various options that one should look at before going forward. A licensed tax professional will help you review the options available to you and guide you through this process.
What Are the Steps Towards a Federal Tax Lien?
In order for a federal tax lien to be processed for an individual or a corporation, the IRS must go through a few steps to determine if an individual deserves a lien. These steps are: assessing the tax liability, sending a notice of a bill and demand for payment. Should you neglect to pay the bill; the tax lien will then be filed against you. Once the tax lien is implemented against you or even before it is, it is important that you contact a licensed tax professional to help you understand the effect of having a federal tax lien filed against you can do to your future credit rating, ability to borrow monies and/or your employment prospects.
Options on How to Rid Yourself of a Lien
Once a lien has been filed against you, it is important to that you pay off the debt in full as soon as possible, if you are able to do this, the lien will be lifted within 30 days by the IRS. If you don't have the option of paying off your debt in full when your first receive the lien do not worry, as there are several other options that you and your licensed tax professional can consider. The first option is to request a certificate of discharge of your property. This option allows you to sell your property free of the lien, and in turn pay off some or all of the debt that you may owe. The second option is to file for subordination, which essentially allows you to move other creditors ahead of the IRS in the hopes that you can get a loan or mortgage to help pay off the federal tax lien that has been applied to you. The third option that is available to an individual or business that has a tax lien is applying for a withdrawal. What this does is it removes the lien entirety from you and assures that the IR
S is not competing with other creditors for your property. Lastly, you can file an appeal if you feel the lien was filed incorrectly.
How Does a Tax Lien Affect Me?
As stated above, the federal tax lien attaches to all of your real and personal property, including financial assets. The lien will harm your credit score and may prevent you from obtaining bank loans or even harm your employment prospects. Filing for bankruptcy will not remove a tax lien as well.
It is important to note that should an individual ever find themselves in the predicament of a federal tax lien that they contact a licensed tax professional and set up an appointment and consultation as soon as possible to discuss the various options that one should look at before going forward. A licensed tax professional will help you review the options available to you and guide you through this process.
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