IRS Putting a Muzzle on Your Assets?
Tax liens and levies can feel like a muzzle on your finances, but Top Dog Tax Relief is here to unleash solutions and protect your assets.
What is a Tax Lien?
A tax lien is the government’s legal claim against your property. The IRS uses tax liens to secure its interest and basically puts a muzzle on your assets until you pay your tax debt. If you owe more than $25,000, the IRS will automatically file a lien against you. A Notice of Federal Tax Lien may also be issued, which can make it difficult to secure new credit or loans. Liens can be attached to both current and future assets. If you do not work with the IRS to pay off your outstanding tax balance, they may move forward and send a Notice of Intent to Levy.
What is a Tax Levy?
If you have a tax lien in place and have not addressed your outstanding tax debt, the IRS will move to seize your assets to pay down your balance. This is known as a tax levy. The IRS can move forward with a tax levy without court approval, but it must notify you in writing before taking your wages or any property.
Different Types of Tax Levies
The IRS has various types of tax levies at its disposal, including:
- Wage Garnishment (wage levy)
- Bank Levy (seizure of bank accounts)
- Tax Refund Offset (seizure of your tax refund)
- Property Seizure (real estate, vehicles, and other personal property)
Additionally, the IRS may levy your retirement accounts, life insurance, and even accounts receivable (business levy).
Can I Stop a Tax Lien or Tax Levy?
Yes! The quickest way to stop a tax lien or tax levy is to pay your tax balance in full. For many taxpayers, however, this is not possible. If you can’t pay your taxes immediately, one of the following options may help you remove or release a tax lien or tax levy.
Tax Lien Removal
Generally, the IRS will withdraw or release a tax lien if:
- You need to sell the property to pay off your tax debt. This is known as a certificate of discharge.
- You enter into an installment agreement and owe less than $25,000 (if certain conditions are met).
- The statute of limitations has run out on collecting the tax debt.
Tax Levy Removal
The IRS will release a tax levy if you enter into an installment agreement or make other payment arrangements, such as an Offer in Compromise. The IRS may also remove a tax levy under the following situations:
- You enter into bankruptcy proceedings.
- The levy was applied prematurely or improperly (IRS failed to send required notices, or you have a pending appeal).
- Releasing the levy will aid you in paying off your tax balance.
- The collection period for the tax debt has expired.