A Quick Review on How to Remove an IRS Tax Lien
Your Checklist to Discharge an IRS Tax Lien
Have you recently received a letter notifying you that you have an IRS Tax Lien?
If so then you may be wondering:
How do I remove an IRS Tax Lien or how would I settle an IRS Tax Lien.
I you are in a situation where the IRS is demanding money from you then you need to know:
- Your rights ( yes you do have some rights )
- How to settle an IRS Tax Lien
- And how will you remove an IRS Tax Lien
There are probably many other questions that may be going through your mind.
Can I appeal an IRS Tax Lien?
When if ever does an IRS Tax Lien expire?
We will try to address these many varied questions in this article.
Whether you think that you owe any money to the IRS or not, there a several solutions you can use to approach this problem.
How Bad is an IRS Tax Lien?
When you owe money to the IRS or your state, it is quite a different matter than just owing money to a bank or credit card company.
This is the Federal Government. These are not people to take lightly.
In most instances, nine times out of ten, you are going to be better off having a professional tax resolution company deal with them and handle the situation.
And yes , like a lawyer or any other service you will need to pay them for their work they do on your behalf.
Many times these experts, (depending on the company you choose) have worked for the IRS for many years.
They know the other side of the equation, the laws, and the mindset of the bureaucrat behind the paperwork.
First off you need to know that the IRS can levy assets, like your bank accounts, or garnish your income from your wages, retirement and even social security…
…without needing to go through any legal process.
They can potentially even seize your property like real estate ( house, rental property), cars, boats etc, that they can sell off to pay off you tax debt.
7 Common Reasons for People to Receive a Federal IRS Tax Lien
#1. Failure to file your tax return.
It is against the law to not file your federal or state tax return. If you don’t file your return(s) the feds and the state will make one up for you.
In the feds case they will file a Substitute for Return or (SFR).
In the state’s case they will file an estimated state tax return (est).
In either case they only take into consideration your income and don’t include any deductible expenses.
In other words they completely slant it in their favor making it look like you owe a lot more than you normaly would if you included your deductions.
#2. Filing an Incorrect Tax Return
Many people, even a Certified Public Accountants make mistakes when filing yours or other peoples tax returns.
Accountants are highly skilled, highly educated and very professional people.
But anyone can make a mistake especially when the US Tax Code is 70,000 pages long.
Even the people who wrote the tax code don’t understand it all.
In reality, doing taxes is more like throwing darts ( or genades) than being 100% accurate.
The problem is, when these mistakes happen it can be very costly for the tax payer as the IRS accuracy penelities can go as high as 75% of the tax debt.
So be accurate. As carpenters say: measure twice, cut once.
#3. Early Withdrawal From Retirement Accounts
If you withdraw from your IRA or 401(k) accounts before the age of 59 1/2 the IRS will impose a 10% penalty against you. Many taxpayers may not realize this and end up having to pay this penalty.
#4. Not Making Your Estimated Tax Payments on Time.
If you don’t make your estimated tax payments on time that tax debt will accumulate to the following year.
Then surprise, surprise. You may not have the money to pay it.
#5. The Deadly IRS or State Tax Audit
If you are unlucky enough to be the subject of a tax audit, depending on the outcome, you may have to pay additional taxes and/or penalities.
Make sure you allow for sufficient with holdings so that you don’t come up short at the end of the year when your taxes are due.
#7. Gambling Winnings
If you have income from gambling then you must declare that on your tax return.
(This could be extended to include any unreported incomes.)
How to Settle an IRS Tax Lien and Remove Your IRS Tax Lien
The IRS has very powerful tactics that they use to collect their debts and they are one of the most powerful collection agencies in the world.
That being the case, a taxpayer still has several ways to get their tax debt with the IRS resolved in a timely, professional way.
Let’s Start with the “Offer in Compromise”
The taxpayer can come to an agreement with the IRS in what is called an “Offer in Compromise”.
This is where the IRS will accept less than the full payment or total amount owed if they feel that you qualify for some special circumstances.
- If the amount is disputed and you can prove (win) your case the IRS will take what they can get.
- If the IRS believes that you don’t have the ability to pay, or that your assets are less than what you owe, again they will take what ever they feel they can get out of you.
- For Form 656 Booklet “Offer in Compromise” pdf file click here.
First time tax payers can sometimes get a penalty abatement which is usually tied to an installment agreement.
The IRS will only allow these abatements if your debt is paid in full or paid in full with the monthly installments.
The taxpayer must prove their case and be compliant in resolving their debts.
If a taxpayer owes a large amount of tax debt and they are not able to pay it all in one lump sum then the IRS will work out an “Installment Agreement” with the taxpayer.
With the “Installment Agreement“ the taxpayer can agree to make smaller payments over a longer period of time.
With the IRS’s “Fresh Start Program” you can pay up to $50,000 of tax debt over a six year or 72 month period.
There are several different installment agreements so it is best to have your professional debt counselor determine which one best fits your needs.
Of the several options, they include but not inclusive:
- Staggered Installment Agreement (SIA)
- Streamline Installment Agreement ( SIA)
- Complex Installment Agreement (CIA)
As mentioned above. Get a professionals help to figure this all out.
You already made the mistake of getting the TAX LIEN with the IRS.
You don’t want to compound your mistakes.
Do you want to know the best part?
IRS Collection Statute Expiration Date (CSED)
Finally some good news…
There is a ten year expiration date in which the IRS has to collect on your debt.
( They can’t just keep hounding you for the rest of your lIfe)
This ten year statute expiration ends the IRS’s right to collect on the tax debt of the taxpayer.
So What’s the Bottom Line?
Don’t try to be the hero.
Yes you can do all of this by yourself. But why would you want to? Are you really a tax expert?
Don’t try to take on the IRS by yourself without the help of a professional debt relief service company.
The IRS wants their money. They have unlimited resources to harass and intimidate you.
The professionals at the IRS pride themselves in their job of collecting the governments debts.
Get a professional tax debt relief company on your side to help get you the best deal that you can from the IRS.
These professional people work with and speak to the IRS everyday.
In many instances they worked for many years for the IRS themselves, so they may even know the person at the IRS that they are speaking to.
At a minimum they know all of the laws, your rights as a taxpayer, and how best to solve your problem because this is what they do.
Helping people solve tax problems and debt issues is their passion.
The Professionals First Step to Settle an IRS Tax Lien
The first steps a professional may take is an immediate stay of execution with the IRS or the state. (If needed)
The next is to just pull the master file to see where you are at.
They will check off your projected financials, transcripts, penalty abatements, statute of limitations, possible resolutions, etc.
Then they will discuss with you the pros and cons of your situation and provide you with the best resolution possible.
If you have any missing tax returns or mistakes they will get you back into compliance with the IRS or the state.
And finally implement the resolution and get you back to “Square One” with the IRS or the state.
But here is the kicker:
Some final words on taxes and taxation from famous quotes:
“The hardest thing in the world to understand is the income tax.” Albert Einstein
( If Albert Einstein couldn’t figure it out you shouldn’t feel so bad!)
“People who complain about taxes can be divided into two classes: men and women.” Anonymous
“Taxes are the lifeblood of government and no taxpayer should be permitted to escape the payment of his just share of the burden of contributing thereto.” Arthur Vanderbuilt
(Arthur must have worked for the government. Ha!,Ha!)
“You must pay taxes. But there’s no law that says you gotta leave a tip.” Morgan Stanley
I hope this article helps someone looking for answers to their tax problem.
Please seek professional help.
There are many great professional tax relief companies to choose from including “Cura Debt”.
When you hire a professional to deal with your problems, whatever they may be, you are exchanging your burdens and troubles on to them.
This frees up an emotional weight off of your shoulders allowing you to just concentrate on doing what you do best.
Producing income and making a living.
Please note that I am not a lawyer or a tax advisor.
I am just a hard working American, trying to keep up with all of the federal and state taxes that we as a nation are forced to pay.
Remember that everyone even in ancient times has had to pay some form of tax to their governing body.
Even Jesus, when asked about taxes said “Give to Caesar what is Caesar’s” ( and to God what is God’s) Mark 12:17
America is still the greatest country on the planet and the land of opportunity.
The taxes that you pay, to local,state and federal governments go to our services that make our lives better.
( first responder’s, fire department, police, roads etc)
Pay your taxes with a smile and be grateful that you live in America.
Good Luck and God Bless.
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