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IRS Tax Lien, Levy and Seizure
IRS Tax Liens and Levies are the tools most often used by the IRS to enforce collection of what is owed to them. Typically a Lien or Levy goes into effect when the IRS has been repeatedly unable to collect a debt from a taxpayer and they decide to create some urgency in getting that person to come clean. And because the IRS has the authority to implement these methods with little prior warning, it often happens that a Notice of Intent to Levy takes the taxpayer completely by surprise, making for an unexpected financial crimp in their business or lifestyle.
IRS Tax Lien
An IRS Lien gives the Federal Government a legal claim to the affected taxpayer's property as security against a tax debt. By filing a Notice of Federal Tax Lien, the IRS is publicly telling the taxpayer's creditors that it has a claim on all of that person's property, including property acquired after the Lien has been filed. Although the owner still has the right to use the property, a Federal Tax Lien prevents the owner from being able to sell the asset(s) due to the fact that the IRS now has a secured interest in the property which must first be satisfied. For instance, an IRS Lien would prevent a taxpayer who is trying to sell his or her home from being able to do so without first paying off the debt. A Lien also makes getting a loan virtually impossible.
Technically, an IRS Lien will not be released until the tax debt is repaid in full. When a taxpayer receives a Notice of Lien, it is an indication that the IRS has become aware of their debt and that further Collections action could be on the way. If a taxpayer who is in arrears with the IRS cannot afford to repay the debt in one lump sum, he or she may be able to file an Offer in Compromise proposal to reduce the debt, or set up a Payment Plan to repay the debt over time.
Sometimes the IRS will allow for a Subordination of the Lien. In this procedure, the IRS Lien is made secondary (that is, Subordinate) to the interest of another creditor so that the taxpayer can acquire some form of private financing with which to repay the debt. Lien Subordination can be beneficial to a taxpayer who owns a house and wants to get a home equity loan to pay off their tax debt. The IRS will allow the Subordination as long as the proceeds of the loan are paid to the IRS up to the value of the Tax Lien - or if they can reasonably expect that doing so will increase the amount that they would eventually collect.
IRS Tax Levy
A Levy is a legal seizure of assets taken in order to satisfy a tax debt, and can be attached to bank accounts, securities, real property and even wages. When the IRS sets a Levy, that Levy prohibits access to the affected assets by the rightful owner and transfers authority to the IRS unless the tax debt is repaid or the Levy is released. An IRS Levy is generally issued to the taxpayer's bank, their and their spouse’s employers, and/or to their business clients’ accounts payable divisions.
A Tax Levy can be particularly painful when a taxpayer is already experiencing financial difficulties, and so sometimes just proving hardship and Uncollectable Status is enough to have the Levy released. Generally however, the IRS will only release a Levy when the taxpayer enters into some type of repayment agreement with the IRS. For instance, if the taxpayer decides to submit an Offer in Compromise or Payment Plan to settle their tax debt, then Collections Action will be put on hold and the IRS will usually release the Levy while the person works out the terms of repayment.
Because of the time-sensitivity of the matter, if you have received a Notice of Intent to Levy from the IRS, you should contact Professional Tax Settlements right away so that we can respond to their threat promptly and prevent Seizure. When prepared properly, the IRS must answer our request for release within ten working days - in an emergency situation, we may even be able to have it lifted within 48 hours.
IRS Seizure
The IRS also has the ability to seize property and assets such as cars, boats, business equipment and real estate. The assets claimed through IRS Seizures are then put up for sale at public auctions. However, it is important to note that the IRS does NOT make money on these actions. In fact, it’s safe to say that they would prefer not to have to go through all the hassle of Seizure. Rather, the intent is purely punitive – it is designed to force the taxpayer’s hand into tax compliance and payment of the debt. And it usually works!
Professional Tax Settlements is the best in the industry at getting the financial roadblocks of IRS Tax Lien, Levy and Seizure lifted for taxpayers and businesses every day. Each year we help thousands get back into compliance and out of debt faster.
For more information about how we can help stop IRS Collections action:
Call Toll Free (888) 282-4697 Or Click Here for a FREE Tax Consultation
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