One possible enforcement actions the IRS may employ is the filing of a Notice of Federal Tax Lien. The effect of an IRS Tax Lien is that when any person or business fails to pay any assessment of tax, plus interest, penalties, or costs. A tax lien in favor of the United States arises upon all property and rights to property, whether real or personal, tangible or intangible, belonging to the taxpayer.
Before the IRS files a Tax Lien, three requirements must be met:
- The IRS must assess the liability.
- The IRS must send you a notice and demand for payment.
- You must neglect or refuse to fully pay the liability within 10 days of notice and demand. Entering into an installment agreement does not preclude the filing of a notice of lien.
By filing am IRS Tax Lien, the Government is providing a public notice to your creditors that the Government has a claim against your property, including property that you acquire after the lien was filed. Caution: Once filed, a lien may harm your credit rating.
DR Sullivan & Company, in cooperation with nationally recognized lending institutions, enables clients to utilize their previously inaccessible home equity by requesting the IRS to subordinate a tax lien, withdrawal a tax lien and in some cases release a tax lien.
Special Release of Tax Lien:
Application for a Discharge of Federal Tax Lien against Property. You may receive a Certificate of Discharge if any of the following circumstances apply:
- You have other property, subject to the lien, that is worth at least two times the total of the tax you owe, plus any additions to the tax you owe and any other debts you owe on the property, such as a mortgage.
- The IRS receives the value of the government's interest in the property and you are giving up ownership.
- The IRS determines that the government's interest in the property has no value at the time you are giving up ownership.
The property in question is being sold, and there is a dispute as to who is entitled to the sale proceeds, and the proceeds are placed in escrow while the dispute is being resolved.
Subordination is made at the discretion of the IRS. It means that the IRS has allowed its lien to take a lower place than someone else's lien.
The IRS may let its tax lien take a lower place than a "junior lienor" (someone whose lien originally had a lower place then the IRS tax lien) if it receives the dollar value of the lien in the property that the junior lienor is acquiring, for example, a second mortgage.
The IRS may also subordinate a lien if they believe that doing so would speed collection of the tax.
Internal Revenue Code 6323(j) an Taxpayers Bill of Rights 2 allows the withdraw of a filed IRS tax lien if:
- The notice was filed prematurely or not in accordance with IRS procedures.
- The taxpayer has satisfied the liability on the notice of lien unless the agreement provides otherwise.
- The withdrawal will facilitate collection of the tax.
- The withdrawal would be in the best interests of both the taxpayer (as determined by the Taxpayer Advocate) and the Government.
The IRS must provide a copy of the withdrawal to the taxpayer and, upon written request of the taxpayer, to other specified institutions
Your Administrative Appeal. You may appeal the filing of an IRS Tax Lien if you believe the IRS filed the lien in error. A lien is incorrect if:
- You paid the entire amount you owed the IRS before they filed the lien.
- The IRS assessed the tax and filed the lien when you were in bankruptcy and subject to the automatic stay during bankruptcy.
- The IRS made a procedural error in making an assessment.
- The time to collect the tax (called the statute of limitations) expired before we filed the lien.
Note: You may not appeal the Notice of Federal Tax Lien if you are challenging the underlying debt that generated the filing of the lien.
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