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Tax Liens

A lien may be defined as a legal claim of a person, entity, or government upon the property of another person or entity to secure the payment of a debt or the satisfaction of an obligation, making it collateral against money or services owed to another person or entity. A lien may keep a taxpayer from selling or transferring his/her/its property, and may affect the taxpayer’s credit rating negatively. Failing to address a lien can have serious consequences.

Tax liens may be imposed for a failure to pay property taxes, and the IRS or state tax authority may impose tax liens to collect unpaid taxes.

The federal tax lien arises automatically when a taxpayer does not pay his/her/its tax liabilities within 10 days of the date sends a notice and demand for payment. The federal tax lien attaches to all property and rights to property of a taxpayer, to include real property interests, bank account interests, etc. However, in order for the federal tax lien to be effective against other creditors of the taxpayer, the IRS must file a Notice of Federal Tax Lien.

Under sections 6321 and 6322 of the Internal Revenue Code, the IRS can file a notice of federal tax lien in favor of the government when a taxpayer does not pay his/her/its tax liability after the IRS demands payment. Generally, the IRS will file the Notice of Federal Tax Lien in the county where a taxpayer resides and with the Secretary of State for the state in which the taxpayer resides and any other county in which a taxpayer owns real property. The federal tax lien becomes public record and can have a negative effect on credit.  If the taxpayer were to sell real property after the federal tax lien has been filed, it is possible that some, all or none of the proceeds from the sale would be paid to the IRS because of the tax lien.

The IRS is required to issue a Notice of Federal Tax Lien and Notice of Your Right to a Hearing Under 6320 when it files a Notice of Federal Tax Lien against a taxpayer. This notice gives the taxpayer 30 days to request a hearing before the IRS Appeals Office.

The Internal Revenue Service will release a federal tax lien within 30 days of the tax debt being satisfied.  Further, the IRS may withdraw a federal tax lien if this withdrawal will facilitate collection of the tax or is in the best interests of the government.

If the IRS has filed a tax lien against you, we recommend you speak with a tax attorney at the Politte Law Offices immediately to see what we can do to help you work out a payment plan or installment agreement, offer in compromise or a tax settlement to handle your tax debt once and for all.

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