Tax Liens Tips

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What is a high risk taxpayer for tax liens?

High Risk Taxpayers & Tax Liens

If you owe any back taxes and have not paid them after receiving an IRS notice, you may be facing a potential IRS lien. This involves the IRS placing a lien on all of your property – personal and real.

This is especially true if your ability to repay your tax debt is in question. Whenever the IRS is unable to attach your tax bill to your wages, you are considered at a higher risk for collectibles. Individuals who fall in this high-risk category include self-employed, sporadically employed, and those collecting unemployment benefits.

   
How do I perform a tax lien search?

Federal Tax Lien Search

Individuals can perform a tax lien search by going to their county courthouse. The tax lien will be filed in the county where the property, business, or person are located. Tax liens are considered a public record, therefore, anyone interested can obtain the information. That is one of the purposes of a tax lien, actually. By letting “the world” know about a tax lien being filed against you, the taxing authority is hoping it will deter you from your unpaid tax bill.

Once inside the courthouse, you can perform your tax lien search by individual (for unpaid income taxes), business (for business related taxes) or property (if unpaid property taxes are the issue).

Records are usually maintained in a computerized database. Computers are located in the ‘Public Records' area. Some courthouses have time limits you need to follow, others do not. Check beforehand. Also check to see if there is a charge for usage or printing.

Many governmental entities offer online tax lien search. By utilizing the online search capabilities of your applicable governmental website, you can save time, money , and frustration.

There also are individuals and firms available to perform a tax lien search for you. Of course, they charge. You need to think if the extra expense is worth it to you. And, perform a background check. Some of these individuals and companies can be unscrupulous.

   
What is a release of federal tax lien?

Federal Tax Lien Release

The easiest way to have a federal tax lien released is by paying the IRS your unpaid tax bill amount. In fact, the IRS will not issue a “Certificate of Release of Federal Tax Lien” until you have paid all unpaid taxes, interest, penalties, and any applicable recording fees in full. Or, you can have your federal tax lien released if the IRS cannot legally collect the tax (as in the case of it being after the statute of limitations time period).

If you cannot pay your tax lien in a lump sum manner, you may want to consider selling your assets.

Filing a bond for the amount of unpaid federal taxes you owe will also release your federal tax lien.

When you have fully paid all your back taxes, the IRS will issue you a “Certificate of Release of Federal Tax Lien”. They are legally required to issue you this Certificate

in a timely manner. A timely manner is within 30 days of you having satisfied, or paid, the tax debt in full.

You also will be required to pay any state or other jurisdiction charges for releasing and filing the lien. Check with your local state for more details.

There is a special unit set up to deal specifically with federal tax liens. Specialized Lien Processing Unit is what it is known as in the IRS.

Payoff. To find out the total amount due on your federal tax lien, request a payoff computation from the IRS. This usually takes about 14 days to process.

You can call the IRS at 1-800-913-6050, or mail them.

When requesting a final balance due on your federal tax lien, you will need to provide the IRS with the following:

Your name, telephone number, and address

Your Social Security Number and or Employer Identification Number

The date you would like to the total to be computed through.

The IRS will mail you two copies of all payoff letters. One copy of the payoff letter must be returned with your payoff amount so the IRS can properly apply your payment to release your federal tax lien.

Forms:

IRS Publication 1450 – ‘Instructions on How to Request a Certificate of Release of Federal Tax Lien' will be useful to you.

  • Obtain the forms from the IRS website or by phone at 1-800-829-1040.
Mail. You can mail your request for the payoff statement or balance due figure to:

Internal Revenue Service
CCP – Lien Unit
P.O. Box 145595
Stop 8420G
Cincinnati, OH 45250-5595

When you sell some of your business or personal assets to satisfy an IRS tax lien, you need to convince the IRS that you are selling your assets at fair market value. This IRS will receive the sale proceeds, and need to know they are getting t

   
What property can be subject to a tax lien?

Property Subject To Tax Liens

To help give a better idea about what property the IRS can place a federal tax lien on, here are just some of the items.

Alimony payments. If you are planning on receiving alimony payments and owe back taxes, the IRS can file a tax lien against the amounts due you.

Real property. Real property is also known as real estate. If you have an interest, or own, some real estate, the IRS can place a tax lien claim on it.

Tangible personal property. Tangible personal property involves any property you own that is easily movable and has substance. For instance, cars, vehicles, signs, furniture, computers, home furnishings, etc. If you owe back taxes, the IRS may file a federal tax lien claim against your tangible personal property.

Intangible personal property. Intangible personal property is defined as items that have no substance. You cannot put a finger on them. Examples of intangible personal property include your company's receivables, stocks, bonds, licenses, franchises, royalties, etc. Anyways, intangible personal property can also face a federal tax lien.

There are, of course, limits and conditions that apply to tax liens and affected property. Visit the IRS website for more information.

   
What is a notice of federal tax lien?

Notice Of Federal Tax Lien

After the IRS has exhausted all attempts to collect your unpaid taxes, the enforced collection process begins. You have already received a Notice of Demand for Payment and have either not contacted the IRS or paid the Notice. You have been given 10 days to do either of these events.

Filing. It is at this point that the IRS will file the Notice of Federal Tax Lien in your county's public records. As mentioned in other sections, the Notice of Federal Tax Lien filing gives notice to all concerned parties that the IRS has a claim against any or all of your property. It gives the IRS priority over other creditors you may have.

IRS federal laws require them to notify you within five days of the filing date for your lien. You will receive this notice:

  • In person, face to face
  • By certified or registered mail
  • Have it left at your home or usual place of business
Discharge. You can have your Notice of Federal Tax Lien discharged when you do not have ownership of the affected property anymore. This applies, for instance, when you sell your property. When this happens, you need to apply for a Certificate of Discharge.

As with most IRS tax laws, there are certain conditions and limitations that apply to a Certificate of Discharge.

For more information on this process and Certificate, IRS Publication 783 will be useful to you. This Publication is titled ‘Instructions on How to Apply for a Certificate of Discharge of Property from the Federal Tax Lien.

Legalities. The IRS will withdraw your Notice of Federal Tax Lien when any of the following happen:

  • IRS procedures were not followed during the filing process of your Notice.
  • The IRS can collect the unpaid taxes quicker by not filing the Notice.
  • You have entered into an installment agreement to pay your back taxes.
  • The withdrawal is in the best interests of both the government and you. This is determined by the Taxpayer Advocate who would contact for any concerns about the tax lien.
The IRS will provide you with a copy of the withdrawal. You can also ask them to send a copy to any other institutions, if desired.

Contact. The IRS has a special unit set up to deal with tax liens. It is known as the Centralized Lien Unit. You can reach them at 1-800-913-6050 if you have questions regarding basic lien inquiries such as routine lien releases and lien payoff amounts.

Payoff. You can request a payoff amount for your federal tax lien. Simply call the Centralized Lien Unit at 1-800-913-6050 to receive an updated lien payoff amount. At this point an IRS employee will issue you a letter containing the current amount (payoff amount) that must be paid before your Notice of Federal Tax Lien is released.

Release. Your Notice of Federal Tax Lien will be released with you pay the entire amount in full.

   
Where can I get federal tax lien information?

Federal Tax Lien Information

To gain a better understanding about the entire area of federal tax liens, here are some suggestions for improving your knowledge base on the subject area.

IRS. The IRS Publication 594 (Understanding the Collection Process) is a useful tool to keep as a reference item. There is a wealth of information in this Publication to keep you abreast about liens, levies, bill collections, collection hearings, and other areas involved.

Order one online, by phone, or by mail.

The IRS also has a separate unit set up to deal with tax lien inquiries. The unit is known as the Centralized Lien Unit. You can reach them at 1-800-913-6050 for any general questions you have.

You also can visit the IRS website for information about liens. Here, you can download Publication 594. You also can visit a classroom discussing the topic.

Stop by your local IRS office and discuss the topic with an IRS agent. Call to see if you need an appointment.

Library. Your local library is sure to have books written by tax professionals describing liens in details. Many books are written in easy to understand terms, also.

College professors. If you live near a college, go visit a professor dealing with business, accounting, or taxes. They will provide insight you may not be aware of. They also may refer you to someone else there that can help you.

Online. Get online and research federal tax liens to learn more about them.

Tax professionals. Ask any tax professional, especially a tax lien specialist, about federal tax liens. CPAs, IRS Enrolled Agents, Tax attorneys,

Real estate professionals. Federal tax liens affecting real estate are the most common form of tax lien. Real estate professionals can provide you with insight and understand of this topic. Real estate professionals may include agents, brokers, attorneys, and accountants.

Chamber of Commerce. Many times your local Chamber of Commerce is knowledgeable about who does what. They may be able to refer you to someone.

Regardless of how you decide to gain federal tax lien information, be certain to check credentials of those you are seeking advice from.

   
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