Owing a tax debt to the Internal Revenue Service can result in a tax lien. If you are not careful, a tax lien can progress to a tax levy, and you could lose important property to the IRS. That is why it is important to understand the difference between a lien and a levy and how each process operates. If you need assistance understanding the nuances of tax liens and tax levies and how they could affect you, contact an experienced Sacramento tax lien attorney today.
The NewPoint Law Group is invested in providing you with the unique legal experience that you need to handle your tax liabilities. Our legal team understands the difficulty of navigating through complex tax regulations, and we are to help alleviate the process. To schedule a confidential legal consultation to discuss your tax situation, contact the NewPoint Law Group at 1-800 358-0305.
Tax Liens vs. Tax Levies
Many people confuse the differences between a tax lien and a tax levy. Mistaking these two terms can result in a person suffering severe tax consequences. The following list will highlight the differences between liens and levies and how each process impacts a taxpayer and their property.
Federal Tax Liens
A federal tax lien permits the IRS to place a legal claim on your property if you owe the IRS a tax debt. Before the IRS issues a tax lien on your property, they will first assess your tax liability. After assessing your liability, the IRS will then send you a “notice and demand for payment” that details the amount of your tax bill. If you do not promptly pay the full total of the debt, the IRS will file a “notice of federal tax lien.”
The federal tax lien notice will inform your creditors that the IRS has a legal claim on your property. It is important to note that a tax lien will be placed on all your property. This means that the IRS will have a claim on your home, personal property, and financial assets.
To free yourself from a tax lien, you must pay your tax debt in full. After the debt is paid, the IRS should retract the lien within 30 days of your payment. If you cannot pay the total amount of the lien at once, the IRS may work with you to create a payment plan. If you require a payment plan, you should ensure that you at least respond to any requests the IRS has made.
Additionally, you may be able to alter the terms of a tax lien under certain circumstances. For example, you may be eligible for a discharge of property. This process allows a taxpayer to have a tax lien removed from certain property. Additionally, a taxpayer can also apply for the subordination of the tax lien. This means that other creditors will have priority over the lien which can make it easier to secure a loan. It is also possible to hide the existence of the tax lien from the public to help your reputation with creditors.
Federal Tax Levy
If you continue to default on your tax debt, the tax lien can progress to a tax levy. A tax levy occurs when the IRS seizes your property to pay for your delinquent tax debts. As mentioned, the IRS can seize any of your assets that are not exempt from the tax lien; this even includes your right to own a certain property.
Prior to a tax levy being performed the IRS must satisfy three requirements. The first two requirements are the sending of the tax bill and a taxpayer’s refusal to pay. After these requirements are met, the IRS must send the taxpayer a “final notice of intent to levy” and a “notice of your right to a hearing.” Both of these notices must be provided to the taxpayer at least 30 days before the levy of property.
Determining when a tax levy will occur is difficult. However, if you the IRS a large amount of money and you have not made an arrangement to pay off your debt, it is likely the IRS will move swiftly to collect the debt.
Our Sacramento Tax Levy Lawyers are Ready to Represent You
If you require assistance handling an IRS tax lien, you should consult with an experienced Sacramento tax levy lawyer today. At the NewPoint Law Group, our tax lawyers possess a wealth of experience handling several types of tax lien issues for residents of Sacramento, and we are prepared to represent you. To schedule a confidential legal consultation to discuss your case, contact the NewPoint Law Group at 1-800 358-0305.