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Tax Liens and IRS Problems

Posted on 08, Oct, 2012

We live in very dynamic financial times and more property owners in the United States are finding themselves in arrears on their taxes and with liens being placed on their property as a result. The media don't really give this issue as much attention as it deserves, especially considering that well over 950,000 liens were issued by the IRS in 2011 alone! It's also worth remembering that an IRS lien will include all of your existing property including your home and any investment properties you might also own.

Having a tax lien on your property won't just have the IRS looking your way but it will also directly affect your credit score with companies like Equifax and TransUnion for example; you'll find that getting any kind of finance or personal loans with a lien present is almost impossible. Of course the biggest problem with a lien is that it will cause you serious problems if you decide to sell your property, especially because the lien won't be removed during the sale but actually becomes an issue for whoever buys the property from you.

The property market is truly a buyers market right now so any attempt to sell a property with "complications" usually won't end well for you as the seller. In certain extreme cases the IRS have actually forced property owners to sell their property to pay off their taxes, using a mixture of fear and intimidation to force the property owners hand.

The good news is that any lien on your property isn't permanent and there are several ways for you to have it removed or to simply challenge the IRS lien itself.

1. Make absolutely sure you actually owe the IRS any taxes in the first place - the IRS are frequently wrong in their estimates and this could well be the case with your lien.

2. The IRS may have issued an SFR (Substitute For Return) if you failed to file a tax return on time and this SFR is usually only an estimate and for a wildly inaccurate amount. In this case file a properly completed tax return and submit it to the IRS, to counter the SFR they issued.

3. Submit an "Offer in Compromise" to the IRS and see if this is accepted. An "Offer in Compromise" can allow you to settle your tax debt for a far lower amount than is actually due. Pay this amount in full if your offer is accepted.

4. Realize that there is a 10-year statute of limitations from when the tax demand was issued to when it should have been collected. If this has passed the lien is removed by statute and your worries will be removed with it.

5. Pay the tax liability in full and this removes the lien straight away - we would suggest trying an "Offer in Compromise" first however.

6. You could check with credit agencies with 30-days of payment being made to ensure your lien has been removed - your credit score will also reflect this.

Having an IRS tax lien against your problem might make you feel like you're trapped and that you have no choices but the above steps show you that you should at least investigate the lien before you simply accept it and pay the amount being demanded of you.


Tags: #tax lien #irs

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