The Prevention and Removal of IRS Federal Tax Liens

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www.longislandtaxresolution.comCall us at: 631-244-1650

1) What is a Federal Tax Lien?

• A lien is a security interest in an asset, securing the payment of a debt of other financial obligations.

• Think of a lien as collateral used to ensure the payee doesn’t default on repayment of his or her debts.

• A tax lien can therefore be defined as a legal claim against a taxpayer’s assets to make sure that a tax debt is paid in full.

• If a taxpayer fails to pay his or her taxes for an extended period of time, the IRS will apply a tax lien against his or her assets to ensure the person pays in full.

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2) Liens v/s Levies

• A tax lien is a document the IRS files to protect the government's ability to collect money.

• A levy is the forced collection of tax; an example is confiscating money directly from a bank account or pay check.

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3) Who Places Tax Liens?

• Federal, state, or local governments place tax liens.

• Federal and state taxes place their own tax liens as a result of unpaid taxes.

• Local governments can place liens for unpaid local income or property taxes.

• Tax liens are public record.

• The asset controlled by a lien cannot be sold, purchased, refinanced, or borrowed against in any way.

• The asset becomes untouchable unless the tax debt is satisfied in full.

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4) Notifying Taxpayers that Tax Lien has been filed

• The IRS generally notifies taxpayers after a federal tax lien has already been filed.

• Federal tax liens are effective ten days after the IRS issues a written demand for payment of outstanding taxes.

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5) Prevent an IRS Tax Lien• To prevent an IRS tax lien, do not default on tax payments.

• File your taxes properly and on time.

• Pay in full to ensure the IRS will never issue a tax lien against you.

• Due to financial hardships, making full payment on time may not be feasible. In this case, you can set up an installment payment plan.

• Installment payment plans show the IRS that you will eventually pay your tax debt in full.

• There are certain terms and conditions that come with installment payment plans.

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6) Removing an IRS Tax Lien

What can you do if a tax lien has been placed on your property?

• You can get a tax lien removed:

o If the IRS is notified of a filing error.o Paying off the tax lien amount in full. o Settling the debt with an offer in

compromise.

• The tax lien may become unenforceable due to the expiration of the 10 year statute of limitations, and then must be removed.

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• Simply put, there are 2 ways to remove a federal tax lien:

o Withdrawalo Release

• Under the IRS's Fresh Start program, taxpayers may be eligible for lien withdrawal or release if the outstanding balance is under $25,000.

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7) Withdrawal of tax liens

• A withdrawal causes the IRS to treat your case as if there was never a lien.

• All records are removed.

• This occurs only when the IRS commits an error.

• If a tax lien has been incorrectly filed against you, immediately contact the IRS to get it rescinded.

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8) Release of tax liens

• A release of a tax lien occurs if the lien was paid off or settled in time.

• Liens are lifted within 30 days of receipt of full payment.

• A lien release is automatically completed once debts are paid.

• A lien can stay on your credit history for up to 10 years.

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9) How Tax Lien Impacts Your Credit

• Tax liens are public record.

• A lien will remain on your credit history for a long period of time, which will negatively impact your ability to take out loans.

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10) Long Island Tax Resolution Service Can Help

• We serve taxpayers seeking assistance in dealing with tax liens.

• We are a federally authorized tax practitioner.

• Regardless of who helps you with your tax problem, be sure to contact a tax attorney, certified public accountant, or enrolled agent.

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