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Tax Lien and Tax Levy Ohio

What is a Tax Lien?

A tax lien is placed on an individual or business when they fail to pay their owed taxes. A lien is to protect the government’s claim on your property to get their taxes, ensuring they will get your property or assets over other creditors.

A tax lien remains in force until the tax debt is paid in full, the statute of limitations on the debt expires, or the taxpayer meets the new IRS Fresh Start requirements.

 

What is The Tax Lien Process?

The process of an IRS tax lien on a taxpayer’s property is as follows:

  1. A tax amount owed through your tax return is left unpaid
  2. A tax bill is sent to your last known address
  3. Amount is paid in full and if not, the IRS will file a “Notice of Federal Tax Lien”

 

What is The Impact of a Tax Lien?

Once the IRS processes a tax lien, it will appear on your credit report. A tax lien on your report will make it difficult to get any future credit or loans. It can create a difficult financial situation for a taxpayer.

 

How Do I Get Rid of a Lien?

With the Fresh Start Program, the IRS has recently made it easier for taxpayers to get liens released. Below are a few ways to get rid of a tax lien:

  • Direct Debit Installment Agreement. The IRS will consider removing a tax lien if the taxpayer agrees to a payment installment plan. They will only release the lien if the payment plan involves automatically withdrawing money from the taxpayer’s debit account monthly.
  • If the IRS didn’t follow correct procedures. If you can prove that the IRS didn’t follow correct procedures, you can fight the lien and they could end up releasing it.
  • Expiration of Statute of Limitations. Once the debt has passed on to the collection stage the lien will be released.

 

How Does a Lien Affect You?

There are 4 different ways a tax lien can affect you:

  1. Assets: If a lien is not paid in time, the IRS will take further actions which can affect your assets and any future assets as well.
  2. Credit: A tax lien will be placed on your credit report until paid in full.
  3. Business: If you own a business, an individual tax lien can affect all business property, etc.
  4. Bankruptcy: Even if you file for bankruptcy, your tax lien will still be present.

 

Lien vs. Levy

If you do not pay your taxes, the IRS will first submit a tax lien and you will have 30 days to pay your taxes in full. If taxes aren’t paid in full, you will receive a “Notice of Federal Tax Lien.” When the amount is still not paid in full, the IRS will issue a tax levy which is able to take your property if you do not pay your debt.

What is a Tax Levy?

A levy is the highest and harshest way the IRS will get their money. A levy is a legal seize of your assets to pay the balance of your back taxes owed. The IRS can levy your bank accounts, investments, wages and more.

 

What is The Tax Levy Process?

The IRS will go through the following steps prior to applying a tax levy:

  1. A tax amount owed through your tax return is left unpaid
  2. A tax bill is sent to your last known address
  3. Amount is paid in full and if not, the IRS will file a “Notice of Federal Tax Lien”
  4. 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 types of Tax Levies are there?

The IRS will use the type of levy to best collect the payment for a taxpayer’s back taxes. Below are some examples of the different IRS levies:

Wage Garnishment:

The IRS will contact your employer to take a certain percentage of your pay to pay for your unpaid taxes.

Bank Levy:

The IRS will contact your bank and demand that they put a hold on your funds until the back taxes are paid.

Property Seizure:

This form of a levy can give the IRS the authority to seize almost any form of asset that is in your name. This includes 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 also levy 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 a Tax Levy?

Below are a few ways to stop a tax levy:

  1. Pay your debt in full
  2. Enter an installment agreement
  3. Demonstrate undue hardship
  4. File an Offer in Compromise (OIC)
  5. Negotiate a release of the levy

 

Need Professional Help with a Tax Lien or Levy in Ohio?

Contact the 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. Call us today at (877) 505-9455 .

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