Tax Lien
What Is A Tax Lien?
A Tax Lien is the first major step the IRS takes against individuals in order to collect back taxes. A Tax Lien gives the IRS a legal claim to your property as security or payment for your tax debt. It is used in order to protect the government’s interest in your assets.
When Is A Tax Lien Filed?
If you have unpaid back taxes and have not cooperated with the demands of the IRS to make the payments of the tax amount owed, it is likely that eventually you will receive a tax lien, which will then lead to a tax levy.
Effects of a Tax Lien
Once the IRS places a tax lien against a consumer, a record of the tax lien appears on his credit report. Tax liens damage credit scores and, unlike most credit report entries, can remain on an consumer’s report for more than a decade. The Fair Credit Reporting Act, which establishes the legal reporting period for different types of debts, states that the credit bureaus must delete the lien from the individual’s file seven years after receiving payment in full.. Until that time, however, future lenders and creditors can view the outstanding tax lien whenever they pull the individual’s credit files. This can adversely affect the consumer’s ability to qualify for financing, credit or insurance.
Avoid a Lien
According to the IRS website you can avoid a federal tax lien by simply filing and paying all your taxes in full and on time. If you can’t file or pay on time, don’t ignore the letters or correspondence you get from the IRS. If you can’t pay the full amount you owe, payment options are available to help you settle your tax debt over time.
Our firm can help you reduce your interest and penalties so that your tax debt becomes smaller. If you are not able to pay what the IRS claims you owe them we can help set up a payment plan. We have an internal system so that you do not miss any of the IRS deadlines.
What Is The Difference Between A Tax Lien And Levy?
A lien is not a levy. A lien secures the government’s interest in your property when you don’t pay your tax debt. A levy actually takes the property to pay the tax debt. If you don’t pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell any type of real or personal property that you own or have an interest in.