Fort Lauderdale IRS Levy & Lien Lawyer Providing Legal Representation for Clients With Tax Debt in Florida
When tax debt remains unpaid, the IRS can take adverse action to collect the amount owed by a taxpayer. Learn the difference between a tax lien and a tax levy and the steps you should take to avoid being taken down this route.
What Is an IRS Levy?
An IRS Levy is a seizure of your property to satisfy a tax debt. A levy can be issued after the IRS assessed the tax and sent you a Notice and Demand for Payment (a tax bill) and you neglected or refused to pay the tax. At least 30 days before the levy goes into effect, you should receive a notice called Final Notice of Intent to Levy and Notice of Your Right to A Hearing. The IRS may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. Please note that if the IRS levies your state tax refund, you may receive a Notice of Levy on Your State Tax Refund and a Notice of Your Right to Hearing after the levy.
The IRS could levy property that is yours but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions). Or, the IRS could seize and sell property that you hold, such as your car, boat, or house.
If your bank account has been frozen, you normally have 21 days to pay the taxes due or make arrangements to pay the taxes. IRS levies must be dealt with immediately. If you have been notified of a levy against you, it is best to contact a tax attorney as soon as possible.
What is an IRS Lien?
Even though one may see the terms levy and lien used interchangeably, those are two completely different processes. An IRS lien is an IRS claim against personal or business property to secure payment of the tax debt. Liens are created 10 days after the IRS notifies you that you have taxes owed (sometimes referred to as a ‘secret’ lien), no matter if it is filed at the courthouse or not. An IRS tax lien can exist when you owe a federal tax debt.
Before filing a federal tax lien, the IRS must assess your tax liability (how much you owe) and send you a bill that explains how much you owe (Notice and Demand for Payment). In turn, you as the taxpayer have neglected or refused to pay the debt in time. Once a lien is filed, the IRS files a public document (Notice of Federal Tax Lien) to alert creditors that the government has a legal right to your property.
How Can You Get Rid of an IRS Lien?
Paying your tax debt in full is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after you have paid your tax debt. When conditions are in the best interest of both the government and the taxpayer, other options for reducing the impact of a lien may exist.
- Discharge of property: removes the lien from the specific property for eligible taxpayers.
- Subordination: does not remove the lien, but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage or to sell their house while a tax lien is still in effect.
- Withdrawal: removes the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property; however, you are still liable for the amount due.
The Commissioner’s 2011 Fresh Start initiative created two additional withdrawal options with specific eligibility requirements. The first option may allow withdrawal of your Notice of Federal Tax Lien after the lien’s release. To be eligible, your tax liability must have been satisfied and your lien released. In addition, you must be in compliance for the past three years in filing – all individual returns, business returns, and information returns; and you must be current on your estimated tax payments and federal tax deposits, as applicable.
The other option may allow withdrawal of your Notice of Federal Tax Lien if you have entered into or converted your regular installment agreement to a direct debit installment agreement. To be eligible, you should be a qualifying taxpayer (i.e. individuals, businesses with income tax liability only, and out of business entities with any type of tax debt) who owes $25,000 or less. If you owe more than $25,000, you may pay down the balance to $25,000 before requesting withdrawal of the Notice of Federal Tax Lien. In addition, your direct debit installment agreement must cover the full balance you owe within 60 months or before the Collection Statute expires, whichever is earlier. You must also be in full compliance with other filing and payment requirements and should have made three consecutive direct debit payments, and you must not have defaulted on your current or any previous direct debit Installment agreement.
How Does a Lien Affect Me?
A lien attaches to all of your assets (such as property, securities, and vehicles) and future assets acquired during the duration of the lien. Once the IRS files a Notice of Federal Tax Lien, it may limit your ability to get credit, and if you own a business, the lien attaches to all business property and all rights to business property, including accounts receivable.
Even if you file for bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien may continue after the bankruptcy. 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.
How Can an IRS Levy and Liens Lawyer Help Me?
If you are struggling to pay your tax debt, an IRS tax debt attorney may help you keep your situation from escalating. The Law Office of Ray Haselman helps Fort Lauderdale clients reach favorable outcomes for their tax problems and resolve any tax levies and liens. Contact us at 786-522-0410 to learn more.