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Tax Attorney

Remove a Tax Lien/Levy

What is the difference between a tax levy, and a tax lien?

Tax Levy
A tax levy is when the IRS tax money from you paycheck, bank account, or even seizes your property to satisfy a tax debt. The IRS can seize and take your house, boat, car, wages, retirement accounts, bank accounts, rental income, and the cash loan value of your life insurance or commissions.
Tax Lien
A tax lien is a hold against your property as security for the tax debt. The IRS will automatically place a tax lien against you if you owe back taxes. This will prevent you from selling any of your property without first paying back your taxes. A federal tax lien usually has a 10 year life span, and will expire when the 10 year statute of limitations is up. The statute of limitations can be extended though due to non-filing, or additional events.

The Levy Process

The IRS can issue a levy against you only after the following three requirements are met;
  1. The IRS has assessed a tax against you, and sent you a Notice and Demand for Payment;
  2. You neglected, or refused to pay the tax; and
  3. The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (Levy Notice) at least 30 days before the levy. The IRS can also notify you in person at your home or business. The IRS can also mail the notice to your last known address via certified mail.

How to Release or Remove a Tax Lien or Levy

Satisfy your tax debt, and pay off the entire amount owed
The IRS will stop levying you, and release all liens against you if you satisfy your debt in full. This can often cause you to pay more than you need to, and can require you to mortgage your home, sell assets, take out additional lines of credit, or take severe budget cuts or borrow money from friends and family.
Submit an Offer In Compromise
When you submit an Offer in compromise to the IRS and they accept it, your tax lien will be released, as well as any levy’s they have against you. The Process of completing and filing an Offer in Compromise can be complicated and lengthy, and requires you to prove that the Offer in compromise will give them more money than they would collect from your currently.
Setup an installment agreement (Payment Plan) with the IRS
The IRS is happy to accept a payment plan from you. If you owe less than $25,000 you can request that your tax lien be removed from your credit as long as you make timely payments. If you owe more than $25,000 you may not qualify for an installment plan, or they may ask you for more than you are willing or able to pay.
Appeal the Lien
You can appeal you case within 30 days of receiving a lien or levy notice. The IRS Appeals department will require you to follow due process and request a hearing. The following are among the reasons you can ask for the lien to be dismissed;
  1. You paid the tax debt in full before the notice was given,
  2. The IRS assessed a tax, and sent you the levy notice when you where in bankruptcy, where the automatic stay protects you from IRS liens or levy’s
  3. The statute of limitations expired before the notice was sent out,
  4. You did not have time to dispute the assessed tax,
  5. You would like to discuss collection options such as a payment plan, installment agreement or Offer in Compromise,
  6. You wish to claim Innocence of Spouse, or other spousal defense.
After your hearing the Office of Appeals will issue their judgment. If you wish to further appeal the decision, you have to file within 30 days of the date of judgment.
Ignore the debt
If you decide to ignore the debt, and the statue of limitations expires (usually 10 years from the date of filing) the lien and levies will be removed. This often is a bad choice since the IRS has many legal ways of extending the statute of limitations, and continuing collection tactics against you. The tax lien will continue to show on your credit report as unpaid, and can be damaging to your credit health.

Myths about Tax Liens

If you transfer ownership, the assets will be protected from the IRS
The IRS is very keen on getting their money, and if they feel that you transferred assets to avoid seizure, or paying your tax debt, they can follow the paper trail and levy not only the transferred assets, but other assets of the friend, family member or person who you transferred it to.
If you file for bankruptcy the IRS can’t collect from you
Bankruptcy is almost never the correct answer for a tax debt. Bankruptcy will only temporarily protect you, and still leaves you vulnerable to having your assets liquidated and sold to satisfy your debt for some chapters. Filing for bankruptcy will not remove your tax lien, extends the statute of limitations on your debt, and all interest and penalties continue to accrue while you are in bankruptcy. Imagine coming out of a chapter 13 after 5 years, and the IRS comes to collect your back taxes, plus all penalties and interest that has accrued.

Hire a Tax Professional

Tax Attorney.com works with tax attorneys, CPA’s, Enrolled Agents, former IRS agents, and tax relief specialists who can assist you with releasing your tax lien or levy. Having a professional who is knowledgeable with IRS collections and appeals procedure can save you time, headache and most importantly money when dealing with a tax lien or levy. A tax professional can take swift and decisive action to help release your personal and business funds that were levied. To speak with a tax specialist, contact us online, or call us at 888-241-0002.
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