The IRS is the most powerful collection agency in the world. Among the tools it has for collecting from people and businesses are tax levy and tax liens. Here is a bit of information on each of these issues, as well as the options you have if faced with either of these.
According to the IRS, a tax levy is the seizure of your property in order to satisfy your debt. If the IRS has assessed a tax against you and has sent you a notice and demand of payment and you still have not paid the taxes that are owed, you may receive a Final Notice of Intent to Levy. In addition, you will receive a notice of your right to a fair hearing.
If you've received one of these notices, it is very important that you react quickly. The IRS gives you thirty days from the final notice to either pay the debt in full or attempt a resolution. Resolving the debt may involve paying the debt off in installments over time.
If you can prove that the levy will cause you an immediate economic hardship, it may be released. Other ways to release a levy, besides making payments or paying the debt in full, include proving that you already paid the debt before the final notice was issued or that you were in bankruptcy proceedings when the notice was issued. Tax levies may also be released if there was a procedural error on the part of the IRS in the attempt to collect the debt or if the statute of limitations on the collection of the debt has expired.
A federal tax lien, the IRS states, is the government's legal claim against your property if you fail to pay your debt. Tax liens attach to all of your assets, including property, securities and vehicles, as well as any future assets you may acquire during the duration of the lien. Liens against businesses attach to all business property and rights to business property including accounts receivable. Tax liens, if in place before bankruptcy is filed, may continue even during and after bankruptcy.
Generally, the only way to have a tax lien removed is through a tax resolution, when the debt is paid in full. However, a new policy pertaining to tax liens speeds up the amount of time between when the lien is approved from approval and when it is erased from credit reports. It is important to note, however, that this only applies to federal-level liens and not to liens at the state level.
Like a levy, a lien can also be appealed and may be removed if the individual or business can prove that the debt had already been paid when the lien was issued, the IRS did not follow proper procedures or there was a bankruptcy proceeding already in place before the lien was filed.
The main difference between a lien and a levy is that the levy actually requires the taking of the property to satisfy the debt, while the lien secures the government's interest in your property when you don't pay your debt. Both issues are difficult to deal with. If you're facing a tax lien or a tax levy, the professionals at Optima Tax Relief can help. Contact us to begin working toward a resolution today.
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