Not paying your back taxes can cause you serious problems. The IRS Tax Lien is one of them and should be avoided at all cost. But first, what is a tax lien?
To make it very simple, a lien is an involuntary charge to someone’s asset to serve as collateral. This is to ensure that tax debts will be paid. If not, the IRS has the right to claim the asset and sell it to pay for your taxes. This is usually done only as a last resort. IRS will exert all efforts to collect taxes before opting to use a tax lien since it is a tedious process and can hurt you real bad. For example, it can leave an almost permanent mark on your credit history.
Tax liens can be placed by either the Federal, state, or local government depending on the severity of the situation. You should also know that Tax liens are public record and assets controlled by a lien cannot be sold or borrowed or refinanced. If your tax debt is still left unpaid after a lien is issued, then the government will seize your assets to pay for the debt in part or in full.
How Can I Avoid Tax Liens?
The most obvious way to prevent IRS from issuing a tax lien is to pay for your taxes regularly. File and pay your taxes promptly and correctly to avoid any problems. If in any case you face a situation wherein you’re having a hard time paying for your tax, you can talk to the IRS to get into an installment agreement. If you do this, IRS will know why you’re not being able to pay and getting an agreement will assure them that you’re going to pay your debt.
What Can I Do To Remove Tax Liens
When tax liens are already placed on your property, the government has already reserved the right to seize that if you do not pay over an extended period of time. But there are ways on how to remove a tax lien on your property before it reaches the point where IRS will issue a bank levy.
Filed in Error – if the lien is a result of an error or miscalculations, the lien will be withdrawn automatically. This happens when there are mistakes on documentation and calculations on tax debt or returns but this does not usually happen.
Pay Your Debt – If you missed the chance to pay your debt before getting a lien on your property, then you can do it as early as possible. This is the only way out. Now if paying your taxes in full is going to cause you other problems, try to give an offer in compromise. This, however, is not an easy path. You need professional help to make sure you can give the IRS an offer they cannot refuse but would still be beneficial for you.
Wait For a Decade – IRS has 10 years to collect outstanding tax liabilities. This is measured from the day a tax liability has been finalized. A lot of tax payers intentionally use this time limit to avoid paying for their debt. IRS usually offers installment agreements before this limit ends but they will ask you to sign a document waiving the ten years limit. And extend it up to 6 more years. Talk to a professional to analyze the best tactics to intentionally wait for the limit without getting into trouble.
It’s not easy to have IRS on your tail bugging you to pay your tax. Because they will do all that they legally can to get that. To help you avoid digging deeper holes, ask for help from a tax resolution expert and let them handle your tax problems.