Federal Tax Lien Process

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What is the tax lien process?

Federal Tax Lien Process

DebtHelp.com Tip: Having a federal tax lien filed against you does not happen overnight. It is part of a legal process ending with the IRS attaching the tax lien to your property.

Here is an easy way to understand the tax collection process leading to a federal tax lien:

Tax return. When you file your tax return you are expected to pay your entire tax bill in full. You will enclose payment along with your tax return. Or, if you are filing your tax return online, you will pay electronically.

Bill. If you do not pay your tax bill in full, you will receive a bill from the IRS stating the amount of unpaid taxes due. Titled ‘Notice and Demand for Payment'. This bill will also contain an explanation of your balance due amount.

You are given the chance to pay your unpaid tax bill (within 10 days of receiving the first Notice) by submitting payment to the IRS. You can do this by check or money order. Or, you can pay via credit card (a convenience charge may apply). Call 1-800-272-9829 or 1-888-729-1040 for this purpose.

If you do not contact the IRS to voluntarily pay your taxes, you will cause the tax collection process to be taken to the next step. This next step is an enforced collection effort to secure payment.

Notice. When you do not pay your tax bill in full, and have not contacted the IRS to arrange a satisfactory payment arrangement, the IRS will file a ‘Notice of Federal Tax Lien'. You will receive this notice when it appears you have neglected or are avoiding the IRS.

The Notice of Federal Tax Lien will give your creditors notice about the IRS having a claim against your property. The tax lien also applies to any property you acquire after the lien is put in place (this is known as a future interest). It also may negatively affect your credit history.

The tax lien attaches to your personal and real property and any future interests you may obtain in any property. If you are a business owner, it will attach to any rights you have in property.

Dispute. If you dispute the amount of your unpaid tax bill (Notice and Demand for Payment), contact the IRS as soon as possible. You can visit your local IRS office, or write to the IRS address on your Notice. When you contact the IRS either in-person or through the mail, have a copy of the bill and copies of any records regarding your tax bill amount. Obviously, you will not be mailing any original documents. Only mail copies of documents that support your position. You can take originals into the IRS office, but be sure to have them returned to you upon your leaving the office. They are your permanent records.

You can also call the IRS 1-800-829-1040 to discuss the Notice. Be sure you have your Notice will you and any supporting documents you need to dispute why you believe the amount is incorrect.

IRS tax laws state you can ask the IRS to review your federal tax lien case, if you seek an appeal on your federal tax lien filing. If you are not satisfied with that, you are entitled to a Collection Due Process Hearing.

Contact. Do not be afraid to contact the IRS. They are there to help you. They want to resolve your unpaid tax bill as quickly as you do. Plus, you are protected during the entire collection process under the Taxpayer Bill of Rights. See IRS Publication 1 (Rights as a Taxpayer) for more information.

   

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