Understanding Federal Tax Lien Notices and What to Do About Them

by | Aug 1, 2023 | Tax Lawyer

One of the most severe implications of failing to pay your taxes is the federal government submitting a legal claim against all of your present and future property in the form of a federal tax lien.

We will define a federal tax lien in this post and offer advice on what to do if you receive a certified letter informing you that you have one.

Please be aware that it is always essential to contact a qualified Tax Resolution Professional who can represent you in negotiations with the IRS. Please get in touch with us through the contact form on our website, www.cottslaw.com, if you’d like to arrange a free and private tax relief consultation.

A Federal Tax Lien: What Is It?

A federal tax lien is a document that you file with a county government (often where you live or operate your business) to let the public know that you owe money in unpaid federal taxes.

The Impact On Your Assets

All of your possessions, including real estate, investments, and automobiles, are subject to a tax lien. It also covers any assets you obtain in the future while the lien is in effect.

The IRS will be compensated before you receive your share if you sell any property while a federal tax lien is in effect.

The Impact On Your Credit

A Notice of Federal Tax Lien is public information once the IRS files it. This information is frequently gathered by credit reporting agencies, so the federal tax lien may eventually show up on your credit report and may make it more difficult for you to get credit.

The Impact On Your Company

All of your company’s assets and rights to assets, including receivables, are subject to a tax lien. This could seriously hinder your ability to conduct business as usual and cause you to fall further behind.

Does Filing For Bankruptcy Help?

You cannot instantly get rid of your tax debt or the Notice of Federal Tax Lien by filing for bankruptcy. Even after filing for bankruptcy, these obligations can still be present.

Are Liens and Levies the Same Thing?

Although the words “lien” and “levy” are frequently used synonymously, they have separate meanings. The government’s legal claim or interest in all of your property is represented by a federal tax lien. However, the IRS does not forcibly seize your property or sell it off. However, having the IRS put a chain around everything you own may undoubtedly make life much more difficult.

Contrarily, a levy describes the process of enforcing a lien through the collection of taxes. This may entail taking money immediately out of your bank account or withholding up to 75% of your net salary.


Steps To Take Now

The best option to remove a federal tax lien, according to the IRS website, is to pay your bill in full. After you pay your tax debt, the IRS discharges your lien within 30 days. However, it is not practical for the majority of people to write a check for the entire sum. An expert in tax resolution can help in this situation.

Contrary to what the IRS advises, your first course of action needs to be to get in touch with a certified tax resolution specialist like ourselves. It is possible to deal with the IRS on your own, but the likelihood of a successful conclusion is low. This is similar to going to court without a lawyer.

An experienced tax resolution professional can formulate a plan for resolving your situation, speak with the IRS right away on your behalf, and start talks to solve your tax issue.

Please feel free to contact our firm, and we will be pleased to arrange a private consultation without any commitment. We’ll go over your alternatives for permanently addressing your tax issue during this session. www.cottslaw.com.

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About Daniel T.A. Cotts

Daniel is a skilled Tax Attorney who moved to Corpus Christi in 2019 to expand his practice and return to Texas. With over 26 years of experience in the legal profession, Daniel brings a wealth of knowledge of Taxation, IRS Dispute representation & resolution, Estate Planning, Accounting, and Business & Contract Law to South Texas.


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