IRS Asset & Property Seizures
If you fail to pay your taxes, your mailbox will be bombarded with notices sent by the IRS trying to collect the balance owed by you. If you repeatedly disregard these notices, you may have a claim filed against you by the federal government. This claim is a tax lien and ignoring it may result in serious repercussions.
What is a Tax Lien?
A tax lien is a public notice issued by the IRS which states that you have unpaid taxes. There are two different types of tax liens, a silent automatic lien and one that is sent to credit reporting agencies. The second type of lien will affect your credit score and severely limit your borrowing power by scaring potential lenders or creditors.
Once you acquire a tax lien, it will affix itself to any assets you own. This means that if you were to sell an asset the lien would spread to the individual who purchased it, making it undesirable and difficult to sell. Additionally, a lien allows the IRS to confiscate any profits made from the sale of a delinquent taxpayer’s real estate at any time that it is in place. So, how do you get rid of a lien?
Releasing a Tax Lien
The only real ways to get rid of a tax lien are to pay it off, including all of its interest and penalties, file for bankruptcy, acquire an Offer in Compromise, or if the collection time limit runs out. Moreover, you can file an appeal to the IRS Office of Appeals to protest the lien.
When protesting a lien, you should contact the office that first filed the lien. If this fails to prevent the lien, you will need to send Form 9423 to the IRS collection office. It will take three business days for an appeals officer to judge your case. It is important to note that this scenario will likely fail to prevent the lien and additional steps must be taken.
Another step that may be taken is to contact either the IRS or the Taxpayer Associative Service, TAS, to articulate why a tax lien would substantially affect your credit score and financial situation thus undermining your ability to settle your tax debt. The organizations will be compelled to listen to your case if you can provide documentation that exhibits your claim. However, if this fails and you still refuse to pay taxes, you will be met with a levy.
What is a Tax Levy?
A levy results from your repeated disregard to the IRS notices sent and your failure to settle your tax debt. A levy is the physical seizure and liquidation of a taxpayer’s seizable assets to pay off their tax debt. It is the last and most drastic resort the IRS will employ to collect your debt.
Despite the IRS being able to seize most of your assets, there are certain ones they cannot take. Some of these are clothing, unemployment benefits, undelivered mail, and child support. Additionally, the IRS is not allowed to levy all your wages, they must leave you with enough to live off. This means that if you are in a lower income bracket, the IRS may not be able to seize any of your wages.
Moreover, the IRS may seize your home if it is your primary residence, but rarely do because it is difficult to do. They also need a court order to sell. However, they will seize any additional real estate. They may also seize personal assets such as boats and cars unless you can prove that they are a necessity. Furthermore, they cannot seize any assets that you gift or store in a safe box. Despite all this, if you are faced with a levy, your main priority should be proving to the IRS that it will result in a financial hardship, restricting you from settling your debt.
How Delia Law Can Help
At Delia Law, we will work with you to gather documentation that will help you dispose of any tax liens that you face or help you acquire an Offer in Compromise to pay off your taxes. If you are facing a levy, we will help you negotiate with the IRS to combat it so that you may retain your assets. Dealing with the seizure of assets is a stressful and serious ordeal and we will walk you through every step.
Call us today at our San Diego Office (619) 639-3336, our Los Angeles Office (310) 494-0100, our Bethesda Office (410) 630-3336, or our New York Office (646) 862-2854 for a free consultation. You may also complete the form below to contact Delia Law for a no-cost attorney consultation.