tax lien ohio

Tax Lien Ohio

 

What is a Federal Tax Lien?

A federal tax lien is a legal claim against your property if you ignore or fail to pay your taxes. The lien protects the government’s interest in all property including the following:

  1. Real Estate
  2. Individual Property
  3. Car Assets
  4. Financial Assets
  5. And More…

A federal tax lien is created, after the IRS puts your balance due, for taxes, to the books.  This includes both assessments and the tax liability. The IRS will then send you a bill that explains how much you owe; this is known as the “Notice and Demand for Payment”.

A Tax Lien is when you then fail or refuse to pay the amount on the “Notice and Demand for Payment” in time. The IRS will then file a public document to alert creditors that the government has a legal right to your property. For more information please refer to “Publication 594: The IRS Collection Process

 

How do I Get Rid of a Tax Lien?

The best way to get a tax lien removed is by paying your tax debt. The IRS will then release your lien within 30 days after you have paid the tax debt.

There are other options to get a tax lien removed. This happens when conditions are in the best interest of both the government and taxpayer. The options to reduce the impact of a tax lien include the following:

 

Discharge of Property

A “Discharge” removes the lien from certain property. To determine eligibility please see the Internal Revenue Code (IRC) and Publications such as Publication 783: Instructions on How to Apply for Certificate of Discharge from Federal Tax Lien

Subordination

“Subordination” does not remove the lien, but it makes it easier to get a loan or mortgage due to the creditors moving ahead of the IRS.  Do you want to see if you are eligible for Subordination?  Please see the following article, Publication 784: Instructions on How to Apply for a Certificate of Subordination of Federal Tax Lien

Withdrawal

A “Withdrawal” will remove the public “Notice of Federal Lien” and will ensure that the IRS is not competing with other creditors to take over your property.  With a “Withdrawal” you are still responsible to pay the full amount of the “Notice of Federal Tax Lien”. For eligibility, refer to – Form 12277: Application for the Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien (Internal Revenue Code Section 6323(j))

According to the Commissioner’s 2011 “Fresh Start Initiative” there are now 2 additional Withdrawal options.  Call today to find out more information (877) 505-9455.

 

How Does a Tax Lien Affect Me?

There are 4 separate ways that a tax lien can affect you. They include the following:

  1. Assets – A lien is attached to all your assets. Even future assets are at risk during the time that you have a tax lien under your name.
  2. Credit – At the time that the IRS files a “Notice of Federal Tax Lien”, there is a possibility that it will affect any/all credit.
  3. Business – The lien will attach to the business property and the full rights to the business property, including accounts receivable.
  4. Bankruptcy – Even if you file for Bankruptcy a tax debt, lien and Notice of Federal Tax Lien may continue after the bankruptcy time is complete.

 

How can I Avoid a Lien?

To avoid a Lien, you need to make sure that you are filing your taxes on time. If you are unable to pay the balance owing, do not ignore the letters from the IRS or correspondence that are sent to you. There are payment options that the IRS offers if you can’t pay the amount in full. These payment options are available to you to help settle any of your debt with the IRS over a select amount of time.

 

Lien vs. Levy

Some people will confuse a lien with a levy.  A lien is not a levy.  A lien secures the government’s interest in your assets and property when you do not pay your taxes. A Levy, on the other hand, takes your property to pay what you owe.

You need to decide on a payment plan to settle your debt with the IRS or they can levy, seize, and sell any of your property that you own or will own within a certain timeframe.

If you have any tax questions about Tax Lien issues you may come across, please don’t hesitate to call Sheppard Law Offices today at (877) 505-9455.