One of the key responsibilities of the Internal Revenue Service (IRS) is collecting taxes, for which it can activate different collection measures. When it comes to collecting taxes, a federal tax lien is one of the most powerful tools in the armory of the IRS. Given the intricacies involved in dealing with a federal tax lien, it is advisable to hire an experienced IRS tax attorney that provides tax lien assistance according to your case. Continuing on the topic, read on, as we discuss the ins and outs of an IRS tax lien.
Overview
A federal tax lien is issued when a taxpayer has unpaid dues and is defined as a legal claim of the US government in your assets. This implies that if a lien is imposed on your assets, and you decide to sell them, the US Federal Government will have the first claim to the proceeds. A federal tax lien may cover your real estate, financial assets, vehicles, and personal property.
Statute of Limitations on Federal Tax Lien
A federal tax lien can last up to a decade and 30 days from the date of tax evaluation. The statute of limitations provisioned under Section 6502 of the IRC expires, and the tax lien will be “automatically withdrawn” from all types of the aforementioned assets. It’s not, however, as simple as it seems, as the IRS can renew (extend) the tax lien, beyond the 10-year duration, 30 or more days before it expires.
Ways to Avoid a Federal Tax Lien
While filing and paying your tax dues on time is the simplest and most preferable way to avoid a federal tax lien, there are also ways that can help reduce its impact once it has been levied. These include:
Subordination
This option doesn’t help in revoking the lien, but allows the taxpayers to get a loan/mortgage approved easily, so they can pay the outstanding tax amount.
Withdrawal
A lien withdrawal helps revoke the public Notice of a Federal Tax Lien. This implies that the IRS won’t be competing with other creditors for selling or mortgage purposes. The taxpayer, however, is still liable to pay their outstanding dues.
Discharge of Property
Discharge of Property exempts specific properties from the lien.
Ways to get an IRS Tax Lien Removed
If avoiding the tax lien doesn’t work, taxpayers still have one option — “Fresh Start Initiative”. This includes:
IRS Installment Agreement
A payment/installment agreement allows taxpayers to pay their unpaid dues in monthly payments instead of a lump sum amount.
Offer in Compromise (OIC)
An OIC allows the IRS and the taxpayer to settle the outstanding amount for less than what is owed.
Final Word
The aforementioned avenues to avoid and remove a tax lien are “eligibility-based” and require taxpayers to be extra cautious about the type of form they are filling out. This is where it is you can rely on the seasoned professionals of the Law Offices of Nick Nemeth. Placed among one of the trusted IRS tax firms in Dallas, TX, we provide comprehensive solutions for IRS-related tax issues – starting from helping you determine your eligibility for tax-relief provisions to preparing a solid case for you and attending hearings on your behalf. To discuss your requirements, call (972) 426-2553. Alternatively, you can fill out our contact form.