Tax lien is a document that is recorded with the county office, which the property owner resides. This document affects a taxpayer’s credit and hampers all assets as well as the rights to it. This includes personal and real estate.
Federal tax lien on the other hand, arise when a citizen liable to pay any tax, fail to pay it after a demand by the government. In a federal tax law, a citizen is defined to include all associations, corporations, companies, estates, individuals, partnerships, and trusts. The filed lien is effective from the date which the government assess the tax. Then, it is considered to relate back to the date of the assessment.
Ever heard of tax lien? How can it affect you financially? A lien can affect your assets, both present and future that you may acquire. This would include mutual funds, stocks, bonds, property, securities, and even vehicles. Your capacity to gain new credit is greatly affected, once an IRS tax lien search is conducted against you. Creditors may deny you new application for credit and increase interest rates or the current ones.
Furthermore, if you are a businessman, the Internal Revenue Service would lay claim against your business. This includes accounts receivable. You would not receive profit even though your business continues to operate.
There are a couple of reasons to lose your home to a foreclosure. The most common is not paying the mortgage. Remember that financial struggles can jeopardize your right to stay in a property. However, the law states that you cannot be evicted right away.
Do take note that the lending institutions would serve notices to you before an actual foreclosure can proceed. Also, some states would allow you to stay up to the last day, until the deed is transferred to the new owner.
Failure to pay the taxes can also cause you to lose your property. If you owe money to the Internal Revenue Service, they can seize your property as payment to the IRS tax lien debt owed.
When the Internal Revenue Service or IRS sends you a notice on tax delinquency, whether on income or property, the first thing to do is to never ignore it. A notice sent by the IRS provide additional time and opportunity for you to respond, and save yourself from bankruptcy or losing property to tax lien auctions. The next thing to do is seek help from a licensed tax professional who knows how to handle and give advice to your dilemma. Tax professionals have the knowledge, deep understanding, and proficiency on how to apply the rules that govern different compliance issues, as well as tax debt scenarios to deal with.
You also need to review the tax returns from which your liability was obtained. Even the slightest mistakes such as declaring income or deductions twice can increase your tax liability. However, this can be fixed by filing an amendment. It is best to consult these things with your tax professional.
Investing in tax deed auctions has attracted many professional property investors in recent years. This makes it a highly competitive money making business particularly in metropolitan areas. However, if you are a keen investor, there is no reason to give up on any transaction no matter how many competitors you’ll be facing. Use some of the techniques below to succeed:
a. Attend live tax deed auctions. Online auctions tend to have higher competitions because of its convenience in bidding from the comfort of your own home. So, if you bid on those properties which do not take place online, then there’s a better opportunity of
b. If it is possible, pick a county near you that has a good number of valuable properties but is not a metropolitan area. Take note that institutional investors might show up in just less numbers if the county is more rural than populated.
Follow these techniques when attending live tax deed auctions to get your dream properties.
A tax lien can come into play to a delinquent taxpayer for not paying tax dues. This includes property, business, and income. States and counties use this type of enforcement to get back lost revenues. The Internal Revenue Service is not your only concern when it comes to collecting tax debt. It is because this also includes the federal government and all the way down to the municipal levels.
Taxpayers have heard about federal tax liens because it comes direct from the Internal Revenue Service. State tax liens are similar to this. The difference between the two is that multiple sections of the government can enforce a lien on the state level. Your state can place this against your property if you fail to pay personal taxes.
You would most likely be faced with a county lien when you fail to pay your property taxes. They can place the lien against both secured and unsecured property. If you do not act quickly, this gives them the ability to take over the property or sell the lien certificate to interested investors.
Municipal tax lien is just as damaging as those listed above. This is also used when a taxpayer fails to contribute taxes. Its process has to do with jurisdiction and based on where you reside.
Always remember that a lien is a serious ordeal no matter if it is state, federal, county, or municipal. When you owe taxes to the government, pay it right away or face the consequences.
You may be dealt with a tax lien or tax levy if you owe money to the Internal Revenue Service or IRS. This gives them the legal rights and claims to your property as well as assets.
The IRS is able to file a tax lien legally on any assets or rights to a property if a taxpayer owes back taxes to the government. However, once the tax debt is paid in full, the IRS tax lien can be released. It must be noted that liens can interfere with the property sale because the IRS can claim the right to the proceeds of the tax
While in a tax levy, it varies from a lien because the actual property and assets are seized by the IRS. They can seize property and sell later on. They can also levy property including wages, bank accounts, retirement accounts, and etc.
If the Internal Revenue Service or IRS filed a tax lien against your property because of unpaid taxes, and you have a difficult time getting it removed, it does not mean your house cannot be refinanced or sold later on. The IRS as a matter of fact, is often interested in helping a delinquent taxpayer’s financial situation. This in turn helps increase your ability to pay tax debt. You might be entitled for tax lien subordination if refinancing your property allows you to pay a lump sum to the government, or increase monthly disposable income.
If the IRS accepts your request for tax lien subordination, they would issue a certificate of subordination of federal tax lien. This document from the IRS permits a potential creditor to move ahead in the creditor position. However, only for the property named on the certificate of subordination and whose name you listed in your request.
An IRS lien is a difficult problem to face. Many tax delinquent payers have lost their properties and possession because of it. But can it be removed? It is possible to get a removal of an IRS tax lien although it is not a simple task to do. Here are two things you must accomplish:
a. Show proof that the lien filed against your property would create economic hardship to you.
b. Provide evidence that if the lien is removed, it would help speed up the tax debt collection.
In simple words, you need to show to the IRS that the lien would leave you with an empty pocket. Also, you want to resolve your tax debt that is why you’d like it to be removed.
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.