How To Understand the Federal Tax Lien

A tax lien is inflicted on a property so that the payment of taxes will be secure. This lien is given to property owners who are not able to pay taxes for their residential properties whether intentionally or unintentionally. There is a lot of information you can learn on tax liens and what they mean.

Here are more information on tax liens:

  1. Federal Tax Lien. The IRS collection division issues a federal tax lien to people who are not able to pay their taxes on time. The tax lien has a lot of different implications on the property of a person. There are different elements that are considered, such as how long the tax lien is going to be imposed. Tax liens are imposed upon properties where the owner has not paid the tax on time when the IRS demands the payment. The property lien can be lifted only when the taxes are fully paid.
  2. Negative Impact. When a tax lien is filed against you, your credit may suffer. There is a possibility that you will not be able to file for loans to buy for other properties and cars. You will also not be able to register for a new credit card if with a tax lien. To avoid this from happening, it is advisable that you prevent having a tax lien by paying your taxes. If you already have a tax lien against you, the best thing to do is to pay all your late fees once you receive the Notice of Federal Tax Lien.
  3. Appealing of Tax Lien. There are several circumstances wherein you can file for an appeal of the tax lien. A hearing will then be conducted if your request for appeal is fulfilled. Some of the events that may happen for you to get an appeal is if you have paid all your tax debts before the tax lien was filed, if the tax lien was issued because of an error or if you want to discuss your payment options with the IRS.
  4. Difference Between Tax Lien and Levy. There is a thin line that separates a tax lien and a tax levy. A tax lien is issued when you are not able to pay your taxes in due time. A notice will first be sent and then you have 10 days to fulfill your payments. When you are not able to pay, a tax lien allows the government to have the right to sell or auction off your property so that the taxes can be paid on your property. On the other hand, a tax levy gives the IRS or the government the right to seize your property and sell it. You will be sent a Notice of Demand of Payment before a levy is applied.

These are some of the facts and implications of federal tax liens. It is hard to get out of these situations that is why you will have to make paying of taxes one of the top priorities that you must do when you get your salary. By doing this, you will be sure that you won’t get into difficult situations with the IRS.


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