Not everybody is familiar with tax deed auction and how it works, unless those who are already in the real estate industry. To those who are inexperienced, you need to go through extensive research and study in order to get good return of investments on tax deed sales. It’s because if you do not, then money, time, and effort would only be wasted.
Utilizing the right techniques and having proper knowledge can help get profitable properties which will give good return of investments. However, there are a few things that must not be forgotten to be paid such as taxes. This is commonly overlooked by some tax deed investors. Also, it is a must to look over the title and other important documents to be assured of getting the property.
Getting to know the concepts behind real estate tax deed investing can be quite a challenge to the mind of an investor. It is because there are technical terms which are not easily understood by the beginners. But once it is known, tax deed becomes a worthwhile investment in getting guaranteed profits.
The filing of a tax lien can have very serious implications on the reputation of a taxpayer. Once it is served, it gives threat to the property owned by the debtor. Due to the not so favorable situation, the credit rating of the taxpayer decreases substantially too. Furthermore, the tax lien filing leaves a bad impression to the taxpayer which can make him not reliable to deal with. As we all know, no creditor likes to lend money to a person that is already ridden with debt. Also, acquiring a new loan now becomes quite impossible to do for the delinquent taxpayer.
So, what is the solution to an imposed tax lien? The most correct thing to do is to pay in full the stated amount thus clearing the tax debt. Then, the IRS would release and make the lien ineffective within thirty working days. Redeem the back taxes and be free of the pressure.
IRS tax lien is a big problem to those who do not pay the taxes in the right time. Plus, it puts a black mark on the credit report which makes borrowing money difficult to do. However, there are solutions to ending the burden of carrying an IRS tax lien on your back.
You need to prove to the IRS that the only reasonable way of paying back the tax debt is by lifting the lien in order to acquire a loan. The loan must amount to the full balance of the tax debt. Then, the IRS is going to verify the lending institution of your choice, if the amount would able you to pay off the tax debt.
You need to do quick action of your tax debt as soon as you get notices about it. Do this in order to prevent the IRS from filing a tax lien against you. You also get to save your property by doing so. Furthermore, remember that if you settle the debt sooner, your credit and other assets would also be safe from this stressful financial dilemma.
The Internal Revenue Service, IRS in short, has wide powers as far as collecting of tax dues is concerned. The first course of action they do to recover the back taxes, is to file a lien against a taxpayer who defaults on the tax redemption.
A lien attaches to all assets and properties of the delinquent taxpayer according to the law. This happens when the federal tax lien is served at once. This is why the IRS is given the legal rights to the assets, including bank accounts of the property owner to get their money. Furthermore, the lien is required to be filed in the public records to make it more effective. The public records consist of the local county office where taxpayers file their tax returns. The IRS does this in order to secure payments of outstanding tax dues from those who neglect their financial duties as citizens.
Tax debts come out for some reasons, expected or not. Maybe you cannot afford the balance on the previous return or underpaid it accidentally. Also, maybe you have a late filing on your annual return or forgot to manage quarterly payments. This is true for independent contractors. A delinquent balance on taxes would cause fines especially if you do not have the money to pay it back.
The IRS can file a tax lien against your property so that they can secure payment for back taxes. They do this when you have reached a certain tax debt limit. If you fail to pay it, the lien grants the IRS the legal right to claim your property. And when you are under the power of the lien, you are unable to get credit, open a new bank account, or secure a loan. Take note that you’re also not be able to sell the property or refinance it during this time. If in case you are planning to purchase a new property, it would also be subject to the same penalties under the lien.
Always remember that a tax lien would still remain on your credit report even if you have resolved it. It is strongly advised not to let be pulled down by it. Do not suffer the consequence of losing your home to IRS tax lien listings.
The law has a handful of tools for overcoming tax liens. If you do not know it yet, it is also called as withdrawal of lien. There are some reasons though that would enable you to withdraw a tax lien. Here are they:
- If the lien would be withdrawn, it can possibly facilitate the collection of taxes from the debtor.
- The lawyer of the taxpayer is going to determine that the withdrawal of the tax lien would do well for both parties.
- The filing of the lien has committed a violation on the procedures of the IRS because of being filed too early.
- A settlement agreement which you have entered doesn’t provide specifically for a lien.
Now, if you think that any of the reasons above matches your concern, then act quickly in saving your credit. Send a complete letter to the IRS along with any important documents. Do this and avoid of the lien becoming permanent.
Tax liens that are issued without warning are illegal. Several notices must be sent to you first by mail before a lien would be issued. However, if the lien has already reached you, then it is time to use asset protection trust to defend your property.
It is a type of advanced planning technique that is utilized in some states in the US, to prevent creditors such as the IRS from reaching your assets in order to satisfy your debt. Still, you remain liable of the tax debt. However, your assets can’t be reached by a federal tax lien if the process is done properly. This also means that it cannot be seized or levied by the IRS.
It is advisable though to hire the services of a tax lawyer to help you understand the asset protection trust. Learning it and using to your advantage may prove to be the best weapon you got.