Tax Lien

How To Handle A Tax Lien

You have a received a tax lien. Now, what? This is a situation that many people find themselves faced with on a daily basis. The situation could happen for many different reasons and can have a wide range of solutions – from quick, easy fixes to something severely complex. If you receive a tax lien, it is important is that you understand your rights as a citizen in how to solve and remove your tax lien. No one wants to find themselves in this situation, but if it happens, there are steps you can take to resolve the problem before it becomes more serious.

What Is a Tax Lien?

Tax Lien
Tax Lien

A tax lien, in the simplest of terms, is a document filed with a government (either city or county) that is a public notice that you have an unpaid debt to the state or federal government. As scary as getting a tax lien sounds, it’s not as uncommon as people might believe. Hundreds of thousands of tax liens are filed by the IRS every fiscal year.

The severity of a tax lien can depend on a variety of factors, one of which is the level of government that issued the lien. It might seem that a federal tax lien would be the most serious tax lien. In fact, state and local tax liens can sometimes cause far more damage than a federal tax lien ever could. Unfortunately, some people find themselves in the position of losing their home due to a couple hundred dollars in back taxes to a local or state government.

Types Of Tax Liens

The extent of the damage will vary from one case to the next, but tax liens issued by local and state governments can undoubtedly cause huge problems and should not be underestimated. But the level of government that the lien originally came from is not the only factor that influences the final results. Even when dealing with local and state entities, the seriousness of the situation can vary largely based on the laws of that state or locality.

With a federal tax lien, working out a solution with the IRS might be more feasible than it is with a state or local tax lien. Even after the notice of a tax lien has been issued by the federal government, the IRS is willing to work with the taxpayer to come to some sort of arrangement to satisfy the tax obligation. Regardless of the issuer, the goal in any tax lien situation is to do everything you can to avoid a tax levy. A tax levy occurs when the government entity sends notification of intent to seize property. This is an outcome you want to avoid at all costs, as to recover from a tax levy situation is substantially more difficult than resolving a tax lien.

Next Steps

The first thing to do with any tax notification is not to ignore it. Although the process may seem intimidating, do not hesitate to begin resolving the situation immediately. The sooner you address the problem, the sooner you will be able to resolve it. If you contact the numbers listed on the paperwork you receive, a solution to your tax issue might be a lot easier than you can imagine.

Next, confirm that the lien is valid. The IRS and other government entities can make mistakes – verifying that you owe what they are saying you owe is essential. Finally, begin the process of finding a solution to the tax lien. A tax lien is not the final collection process in tax recovery. The situation can get worse and if it is not taken seriously, it will. This is the most important thing to remember when confronted with a tax lien. It isn’t something that you want to happen, but if it does, you can take steps to resolve it before it becomes an even more grave problem.

Even though a tax lien can give your credit a kick in the ribs, it is absolutely a situation that you can recover from. What’s important is that you know your rights and all of the options available by law to resolve your tax situation in the most favorable way possible. Hiring an experienced tax lawyer will give you the legal know-how to get through this situation with minimum effect on your property and your credit. Contact today so that we can let our tax law expertise work for you.