If you owe taxes to the IRS, you are likely feeling overwhelmed. Unpaid taxes can have serious consequences at both the state and federal levels. There are many different methods they may employ to secure repayment on your debt. One of the most severe penalties you might face is a tax lien against your property. In the simplest terms, a tax lien is a public claim filed by the IRS or other agency against your property that notifies others that you owe the lienholder money.
If you need IRS tax lien help in Bethesda, Maryland, the Delia Law team can assist you in overcoming your lien or potentially avoiding the long-term penalties that may come from a lien on your property. We know how difficult it is to seek help in such a situation, but we also know that getting help from an experienced tax attorney is the best way to avoid a worse one. An IRS lien against you or your business can also lead to significant financial complications, potentially resulting in you losing the property named in the lien or your business losing control over accounts receivable. The sooner you meet with an experienced tax attorney to resolve this issue, the more likely you are to avoid these severe penalties.
What Is an IRS Tax Lien?
An IRS tax lien is a public notice that the government has a legal claim over the property named in the lien. If the IRS files a lien against your home, the lien denotes that the IRS has a legal claim on the home. The government may eventually seize it and sell it to satisfy your tax debt. A lien is a serious issue that can have far-reaching consequences.
Typically, a lien will occur if the IRS has performed a formal assessment on a taxpayer’s outstanding tax liability and filed a notice and demand for payment, but the taxpayer does not respond within the time allotted. If a taxpayer is unable to pay it promptly, the IRS will initiate lien proceedings against the taxpayer’s known assets in the form of a public Notice of Federal Tax Lien. When creditors see this lien, the taxpayer will take a massive hit to their credit rating.
How an IRS Tax Lien Can Affect Your Life
A blow to your credit rating is just one potential effect of the IRS filing a lien against you for unpaid taxes. A lien attaches to all of your assets and properties. This includes those which you gain in the future after the lien has been filed for the full duration of the lien. It is also possible for a lien to affect a business that you own, potentially jeopardizing your business property and assets, including your accounts receivable.
Another important thing to remember about an IRS tax lien is that bankruptcy likely won’t erase the lien. Even if you file for and receive approval for bankruptcy, the IRS tax lien will remain, and you will still need to satisfy the tax debt or reach an alternate resolution to have the lien removed.
Getting Rid of an IRS Tax Lien
Once the IRS has placed a lien on your property, you want to have it removed as quickly as possible. The IRS may decide to take different actions with the lien based on various criteria. For example, you might qualify for a discharge of property if you pay off your tax debt in full or meet other criteria. In other cases, Subordination may be appropriate, and this allows other creditors to act ahead of an IRS lien, potentially making it easier for you to buy a home or secure financing for another purchase.
Withdrawal of the IRS lien is only possible under specific conditions. The first option is to repay the tax debt that led to the lien in the first place. Once you are current with all taxes owed and you are in compliance with your tax filings for three consecutive years, the IRS may withdraw their lien against your property. They may also initiate a withdrawal if you qualify for a Direct Debit Installation Agreement that will satisfy your tax debt within 60 months and if you owe less than $25,000.
The final method for removing an IRS tax lien is based on technicality. The IRS follows a ten-year statute of limitations for pursuing unpaid taxes and following up on tax liens. Once this ten-year window has passed, the IRS will write off the unpaid debt and essentially wipe the slate clean for the taxpayer. While this may sound like a complete resolution to a tax lien, it takes a full decade for this to happen, all the while you will suffer the consequences of an IRS tax lien held against your property.
Why You Should Hire a Tax Attorney
Both the IRS and the Comptroller of Maryland offer taxpayers various methods to eliminate liens at the federal and state levels, respectively. When you are dealing with an IRS tax lien against your property, navigating the processes and paperwork you will need to submit to have a lien removed can be extremely difficult without legal guidance. An experienced tax attorney in Bethesda, Maryland can help you determine the best approach to an IRS tax lien and help you move past the issue as soon as possible.
Your attorney can thoroughly review the contents and terms of the lien, your tax record, and your current financial status to determine the best approach to solving your IRS tax lien. A skilled tax attorney will guide you through all of the paperwork you will need to complete and help you gather the documentation you will need to submit along with it. Hiring a tax attorney can make handling your IRS tax lien much faster and easier.
When you need IRS tax lien help in Bethesda, Maryland, call our team. Attorney Dawn Delia and the team at Delia Law have solid experience dealing with IRS tax liens and can help you determine the best available remedy to your situation. Contact us today and schedule a consultation to find out how our firm can help.
Maryland-Specific Tax Laws
Maryland has a progressive tax system, which means the higher an individual’s income is, the higher the percentage they will pay in taxes. Maryland has special tax benefits for military retirees, lower income families, those paying for childcare, as well as for those aged 65 and older.
There are four types of taxes in Maryland:
- State income tax. The state tax rate for personal income tax begins at 2%. This is applied to anyone making under $1,000 per year in annual income. It increases up to 5.75% for anyone making over $250,000 annually. This is one of the lower state income tax rates in the United States.
- Local income tax. There is also a local income tax, which is levied by counties and cities. For convenience, these are withheld during income tax season by the state, and they vary based on the locality. For example, if you live in Allegany County, you paid a .0305 tax rate in 2021. This differs from residents of Baltimore County, who had a .0320 rate. It is important to note that this income is based on the county you live in, not where you work.
- Sales tax. With each purchase in Maryland of a good or service, a 6% sales tax is automatically applied. This does not include every purchase. Groceries, prescription drugs, and gasoline are a few examples of items not subject to sales tax. However, a business is required to collect a 9% tax on any alcoholic beverages sold.
- Property tax. You must pay property taxes in Maryland as well, and the tax rates vary by county. The average effective tax rate is 1.06%. While this might seem low, it is balanced by the high property values in the state. The median home value in Maryland is currently over $400,000 and varies based on proximity to the city of Maryland and other populated areas.