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What is a Tax Lien?
When an individual or business fails to pay their taxes, in Indiana, a tax lien is then placed on their assets and property. A lien is placed on a person or business to protect the government and making sure that they get their taxes owed paid to them. If the taxes are not paid then they will sell your assets and property to get their taxes, if they get your property or assets before creditors.
A tax lien remains in force until the tax debt is paid in full when the statute of limitations on the debt expires, or the taxpayer meets the new IRS Fresh Start requirements.
What is The Tax Lien Process in Indiana?
The process of an IRS tax lien is as follows:
- Step 1: A tax amount owed on tax return is left unpaid
- Step 2: A tax bill is sent to your last known address
- Step 3: Amount is paid in full or if not, the IRS will file a “Notice of Federal Tax Lien”
Will a Tax Lien Harm my Credit?
When a tax lien is processed, it will show up on your credit report and can affect you getting a new car, loans or even a mortgage. It can create a difficult financial situation for the taxpayer.
How Do I Get Rid of a Lien?
The Government of Indiana has a program to help if an individual or business gets a lien, this program is called the “Fresh Start Program”. This program was developed by the IRS to make it easier for a taxpayer to release a lien under their name. The following are a few ways to get a lien released:
- Direct Debit Installment Agreement: this is when the IRS may consider removing your lien if you agree to pay what you owe in taxes in a pre-authorized payment agreement.
- If the IRS didn’t follow their procedure correctly: When hiring a tax attorney in Indiana, they can check to make sure that the IRS followed the correct procedures when placing a lien on your assets and property. If they didn’t follow procedure, then you and your tax attorney can fight the lien and the IRS will then have to release it.
- Expiration of Statute of Limitations: When what is owed is passed on to creditors for collect, the lien can be released.
How Can a Lien Affect Me?
There are 4 separate ways that a tax lien can affect you:
- Assets: If you do not pay the IRS in time then this can affect all your assets as well as future assets.
- Credit: A tax lien is visible on your credit report
- Business: If you own a business the tax lien on your individual account can also affect your business and all its assets.
- Bankruptcy: Even if you decided to take the step and file for bankruptcy, the tax lien will not be released and will still be present.
What is the Difference Between a Lien and a Levy?
A lien and a levy are two completely different processes that the IRS has in place to collect the taxes that are owed to them.
When you don’t pay your taxes, the IRS will first send you a notice/ bill and you have 30 days to pay your taxes in full, or you can hire a tax attorney that specializes in Indiana IRS processes, and they can make this process with the IRS a lot easier to handle.
If nothing is done in that 30-day period, the IRS will then issue a “Notice of Federal Tax Lien.” When the amount is still not paid in full, the IRS will then issue a tax levy to take your property that is equivalent to the amount owed so it can be sold and pay your taxes.
What is a Tax Levy?
A tax levy is the ultimate last step that the IRS takes, to get the money owed to them. a levy is a legal seize of your assets and property to pay the balance owing on your back taxes. Some items that the IRS can levy include your bank accounts, investments, wages and many more.
What is The Tax Levy Process?
The following steps is the process that the IRS takes when applying a tax levy:
- The balance owed on your back taxes are left unpaid
- A tax bill is sent to your last known address
- Amount is paid in full and if not, the IRS will file a “Notice of Federal Tax Lien”
- The IRS will send a “Final Notice of Intent to Levy” and “Notice of Your Right to A Hearing.” The levy will start 30 days after these notices are sent.
What are the Different Types of Levies?
The IRS will use the type of levy that they see fit and best to collect their payment from the taxpayer’s back taxes the following are the several types of levies:
- Wage Garnishment: The IRS can contact your employer to take a percentage of your pay to pay your back taxes.
- Bank Levy: The IRS will contact your bank and they can put a hold on your funds until the back taxes are paid.
- Property Seizure: The IRS will have the authority to seize almost any form of asset that is in your name. This can include your house, boat, car and more.
- 1099 Levy: The IRS can take money from the funds owed to you on your 1099 payments. They can go after what you’re currently getting but nothing owed to you in the future.
- Other Asset Seizure: The IRS can levy your retirement funds, dividends, licenses, life insurance and more.
- Seizure of Passports: The IRS can request that the state department revoke, or deny your passport if you owe $50,000 or more in back taxes.
How can I Stop the Possibility of Getting a Tax Levy?
Below are a few ways to stop a tax levy:
- Pay your back taxes in full
- Have an installment agreement with the IRS
- Demonstrate undue hardship
- File an Offer in Compromise (OIC)
- Negotiate a release of the levy
What is a Wage Garnishment?
When you owe money for back taxes to the IRS, they can receive their money by contacting your employer and take part of your wages. This process of a levy does not need a court order for the IRS to do this. The amount of your wages that you receive will all depend on how many dependents you have as well as your standard deduction amount.
The IRS will send a wage levy notice to your employer, your employer is then required to give you a copy. The notice includes an exemption claim form, which you should complete and return to the IRS immediately.
Need Professional Help with a Tax Lien or Levy in Indiana?
Contact the trusted professionals at Sheppard Law Offices today if you’re having troubles with the IRS. If the IRS has issued you a tax lien or tax levy the tax attorneys at Sheppard Law Offices are here for you, and will make sure that you get the best settlement possible. Get your life back on track today and call us at (877) 505-9455.