WHEN THE IRS FILES A TAX LIEN

Federal Tax Lien, IRS Tax Lien, Tax Resolution & Tax Debt Relief Help 

The good news is that the IRS cannot just file a Notice of Federal Tax Lien (NFTL) without any warning or notice.  Several things must first occur before an NFTL gets filed.  An assessment must be made, notice and demand for payment must be made, and the taxpayer must neglect or refuse to pay the assessment.  In order for the IRS to file a tax lien, the IRS is required to first make reasonable efforts to contact the taxpayer.

So what constitutes reasonable efforts?  The IRS has determined that issuing a statutory assessment notice and balance due notice satisfies this requirement because these notices provide 10 or more days for the taxpayer to pay the liability thereby allowing them to avoid additional penalty and interest charges.  The IRS is only required to mail these notices to the last known address that they have on file.  Due to this provision, it is advisable to always keep the IRS up to date with your current address.  Of course, as with most IRS rules, there are some exceptions to these notice requirements but since they are not very common, this article will not be addressing the limited exceptions.

NEED HELP WITH OFFER IN COMPROMISE, TAX SETTLEMENTS, TAX PREPARATION, AUDIT REPRESENTATION OR STOP WAGE GARNISHMENTS?

 

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

BBB A+ RATED

CALL (713)300-3965

NOTICE OF FEDERAL TAX LIEN (NFTL)

Things get a lot more serious when the IRS issues a Notice of Federal Tax Lien (NFTL).  An NFTL is a public notification that is filed with a designated state and local jurisdiction for the purpose of informing the world of the existence of the statutory lien securing the tax debt.  The purpose of a federal tax lien is to establish the Government’s right of priority against creditors.  The types of people who want to know about the existence of an NFTL include lenders, purchasers, and holders of a security interest such as a mechanic’s lien, UCC lien, mortgage or judgment lien.

With most liens the typical rule of thumb is “first in time, first in right,” meaning that a secured interest that is created and perfected prior in time to another secured interest will take priority over the subsequent secured interest.  However, federal tax liens are oftentimes referred to as “super liens” because they can sometimes avoid this rule. 

WHAT IS AN IRS TAX LIEN?

Let me begin with an explanation as to what exactly a federal tax lien is before going any further.  In a nutshell, a federal tax lien is a claim against property, including current and future rights to property. It represents a tax or tax related debt of an individual or business.  Note that a statutory federal tax lien comes to existence by operation of law once a tax liability is assessed.  Aside from always paying your taxes on time, there isn’t really much that can be done to avoid a statutory tax lien.  

However, a statutory tax lien, sometimes referred to as a “silent lien,” is not a public record, and, for the most part, ought not to be a major cause for concern (though owing the IRS is definitely a serious cause for concern).  Generally speaking, a statutory tax lien won’t hurt your credit and won’t impair your ability to borrow or buy and sell assets.

HOW DOES A FEDERAL TAX LIEN AFFECT ME OR MY BUSINESS?

Now that we have a basic understanding as to what a federal tax lien is, the next logical question probably is why should I care about a tax lien?  An individual or business should be concerned about tax liens because by alerting creditors, they then become aware of the statutory lien and tax liability through the Notice of Federal Tax Lien filing and then those creditors must compete with the lien.  The mere filing of the federal tax lien may affect the creditworthiness of the person or business against whom the lien was filed.  

Furthermore, it may also impact the ability to get a loan, or a new credit card, or the financing needed to buy a house or a car, or even to sign a lease, just to mention a few things.  All of the determinants of a tax lien make it important that taxpayers resolve outstanding tax liabilities as quickly as possible before a Notice of Federal Tax Lien filing becomes necessary.

It is worth noting that the IRS generally will not issue an NFTL for liabilities of less than $10,000.  However, there is no guarantee that they won’t issue an NFTL for smaller tax debts.

Some additional good news is that the IRS is not always obligated to file a tax lien.  There are pre-filing considerations that the IRS must first consider.  Internal Revenue Code Section 6320 requires the IRS to balance the need for efficient collection of the tax with legitimate concerns of the taxpayer.  This is done in order to ensure that the IRS’s actions are no more intrusive than necessary.  Some of these considerations include but are not limited to a taxpayer’s current and previous tax compliance history, a taxpayer’s qualification for a determination exception, protection of the government’s interest (including exigent circumstances where the filing of an NFTL is necessary to protect those interests), and a determination of whether a Notice of Federal Tax Lien filing will hamper collection.

Some determination exceptions include securing certain payment agreements such as guaranteed/streamlined installment agreements or in-business trust fund express agreements that resolve the outstanding tax liability within pre-established timeframes, which tend to be relatively short. 

However, just like with most IRS provisions, there are exceptions to these guidelines that allow the IRS to file a tax lien despite the taxpayer qualifying for a resolution alternative that does not require a lien to be filed.  These exceptions typically involve a determination by the IRS that it is in their best interest to file a tax lien due to the taxpayer in question being a repeat offender (e.g. defaulting prior resolution agreements and/or taxpayers who have a track record of continually accruing liability).

Even if all of the above mentioned pre-filing criteria have been satisfied, do not give up hope as all is not lost.  The IRS is still able to choose to not file a Notice of Federal Tax Lien provided that they are able to support why not filing one would be appropriate.  These types of situations vary on a case by case basis so having a qualified tax attorney on your side can be very beneficial in persuading the IRS that a tax lien would not be appropriate.

CIRCUMSTANCES WHEN THE IRS DOES NOT NEED TO FILE A TAX LIEN

There are some limited circumstances when the IRS does not need to support their decision to not file a fax lien.  Some of these circumstances include:

When the aggregate unpaid balance of assessments is less than $10,000 or the balance to be reflected on the tax lien is less than $2,500;

When there is no reason to believe a lien filing will be required in the future. One example of this would be a pending full abatement of the tax liability;

The taxpayer is a defunct corporation or LLC (where the LLC is liable) whose assets have been previously liquidated;

The taxpayer is deceased and there are no known assets in the estate;

The taxpayer is a corporate entity or LLC (where the LLC is liable) that has gone through a liquidating bankruptcy;

When a non-paying officer has been assessed the Trust Fund Recovery Penalty and an adjustment is pending because the assessment has been paid by another officer;

There is an indication that the liability has been satisfied or that credits are available to satisfy the liability;

The taxpayer is in bankruptcy and the tax lien relates to liabilities incurred before the taxpayer filed for bankruptcy;

There is genuine doubt as to the validity of the liability.

Bottom line, a Notice of Federal Tax Lien can be very detrimental to any individual or business and so it is very important to act quickly when one becomes aware of an outstanding federal tax liability so steps can be made to address and ultimately resolve the liability before the IRS determines that a Notice of Federal Tax Lien may be necessary.  

If you are concerned about a Notice of Federal Tax Lien, I suggest you contact a tax resolution professional or call Advance Tax Relief .

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

 

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

 

Advance Tax Relief is rated one of the best tax relief companies nationwide.

#FreshStartInitiative

#OfferInCompromise

#TaxPreparation 

#TaxAttorneys

#TaxDebtRelief

IRS BANK LEVIES AND HOW TO AVOID THEM

Have you ever been behind on payments? Bank levies will give your creditors a powerful tool to collect their dues from you. A bank levy is actually a legal action that allows owed money to get taken directly from your bank account.

Once set in motion, your bank will freeze the funds in your account and then send the amount you owe to your creditors to settle your debt.

The creditor must provide your bank with proof of a court ruling against you before the bank can freeze your account. In some situations, your bank account may survive the freeze, especially if the only funds in your account are from federal benefits.

However, some creditors do not need any court ruling; these include government agencies that collect state and federal taxes as well as student loans and child support.


NEED HELP WITH OFFER IN COMPROMISE, TAX SETTLEMENTS, TAX PREPARATION, AUDIT REPRESENTATION OR STOP WAGE GARNISHMENTS?

ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965

Don’t Ignore Debt Collectors
Once your bank account gets frozen, you’ll still suffer certain negative consequences even if you manage to remove the bank levy. For example, all the checks you wrote before the freeze won’t be cleared, and you’ll also not have access to the funds in your account.

To avoid this, pay off your debts on time. Don’t ignore the debt collectors when they come knocking. If you don’t have enough cash to clear the debts, you can agree with them and come up with a manageable payment plan to give yourself more time to settle your debts.

Many creditors, even the federal and state taxing authorities, will be more than willing to work with you on this.

Have Government Assistance Funds Deposited Directly to Your Bank Account
If your bank receives a garnishment or an attachment order, it will review the funds in your account to find out if a part of them is related to government assistance income such as veterans or social security benefits. These kinds of funds will be spared from the freeze.

Other benefits covered by this rule include:

Unemployment and sickness
Federal railroad retirement
Supplemental Security Income
Federal Employee Retirement System
Civil Service Retirement System
If the assistance is deposited directly into your account, the bank will not have the authority to freeze them. But if you receive it in the form of checks then the funds can get frozen.

They will stay frozen until you prove or claim the right to have the money released. In short, to avoid the bank levy, switch all government assistance to direct deposit.

Maintain Your Social Security Funds at the Same Account
Your social security funds enjoy special protection, especially if you have them deposited directly to your account. They will retain their protection even after you receive them. However, if you transfer them to a different account or if you get them mixed up with other funds, they may lose this special protection.

It would be very difficult for you to prove that the funds are from social security. The secret to avoiding these funds from being frozen is to have them stay in the account where they were initially deposited.

Know Your State’s Exemptions
Each state has a set of laws that protect certain incomes or property from being claimed by creditors to settle debts. Try to learn these laws so you can be able to ward off creditors who may want to claim your income or property.

When you have both exempt and non-exempt funds in your account, use the non-exempt funds first to pay your bills so that only the exempt funds can remain in your account.

To Avoid a Bank Levy, Keep Separate Accounts for Exempt Funds
If possible, you can keep a separate account for funds that qualify for an exemption. If this case, if an attachment occurs, you can easily have the funds released by showing that the account only contains funds that qualify for an exemption.

If you have in one account some funds that qualify for an exemption and some that do not, you may have a hard time proving to a judge that the frozen funds should qualify for an exemption.

You will have to trace the source of the funds to prove your case. This is a daunting task and it may take a very long time.

Don’t Keep Money in a Bank You Owe
Keeping your money in a bank that holds your checking or savings account makes it easy for them to use your savings to offset any amount you owe them.

If you fall behind on your payments and as long as you owe some money to the same bank that holds your savings or checking accounts, they will not need any court order or judgment to do this.

To be safe, it is better to keep your funds in a bank that you don’t owe any money. While it is a common practice for many businesses to keep accounts with banks that provide them with lines of credit or bank loans, it is not wise to keep personal savings in such accounts.

Talk to an Attorney in Case of an Issue with a Bank Levy
It is unfortunate that once your creditor has made a request, your account will immediately get frozen as your bank reviews your case. Neither your bank not your creditor will notify you that the levy has been effected. You might only realize when you try to make some transactions or withdrawals.

If you feel that your creditor has not acted fairly, you have every right to dispute the bank levy. This can reduce the amount your creditors can claim from your account or it may stop the levy altogether. If you don’t take any action, the creditors may sweep your account clean, leaving you with the stress of keeping your business afloat.

You may not be in a position to handle this situation on your own because appealing a levy is a complicated process. That’s why if you are faced with a problem, you should consider talking with an attorney.

NEED HELP WITH OFFER IN COMPROMISE, TAX SETTLEMENTS, TAX PREPARATION, AUDIT REPRESENTATION OR STOP WAGE GARNISHMENTS?

ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.


Advance Tax Relief is rated one of the best tax relief companies nationwide.

#FreshStartInitiative
#OfferInCompromise
#TaxPreparation
#TaxAttorneys
#TaxDebtRelief
#TaxHelp 

CAN THE IRS SEIZE MY PROPERTY FOR BACK TAX DEBTS?

The IRS can take your home to satisfy a tax debt, but can they collect your car or other pieces of personal property? Yes. A tax levy legally permits the IRS to seize property including:

Your personal vehicle

Real estate

Putting a levy on your bank account

Wages, through wage garnishment

Investments

Collectibles

Basically, any asset that could be liquidated in order to satisfy an outstanding tax bill. However, as we mentioned, certain circumstances would render some personal items off-limits; for example, if seizing your home would cause economic hardship, the IRS may be forced to take other actions.

NEED HELP WITH OFFER IN COMPROMISE, TAX SETTLEMENTS, TAX PREPARATION, AUDIT REPRESENTATION OR STOP WAGE GARNISHMENTS?

 

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

BBB A+ RATED

CALL (713)300-3965

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

 

Advance Tax Relief is rated one of the best tax relief companies nationwide.

#FreshStartInitiative

#OfferInCompromise

#TaxPreparation 

#TaxAttorneys

#TaxDebtRelief

#TaxHelp

STEPS TO RESOLVE TAX DEBT PENALTIES

The steps to resolve penalties depend on the penalty (late filing, late payment, return accuracy) and the type of proceeding (electronic assessment, audit or CP2000, etc.).  For each of the major penalties, here are the steps to resolve and get penalty relief:

Accuracy penalties: Taxpayers follow the deficiency procedures during their audit or CP2000 notice when requesting relief (i.e. non-assertion) for accuracy and other return-related penalties.  If the taxpayer misses the appeal during the audit or CP2000 notice, they can request penalty relief by audit or CP2000 reconsideration.

Estimated tax penalties: For estimated tax penalties, taxpayers request a waiver of the penalty (i.e. annualized income method, etc.) when filing their return (suing Form 2210).

NEED HELP WITH OFFER IN COMPROMISE, TAX SETTLEMENTS, TAX PREPARATION, AUDIT REPRESENTATION OR STOP WAGE GARNISHMENTS?

 

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

BBB A+ RATED

CALL (713)300-3965

Failure to file/pay penalties:  However, for assessed failure to file and failure to pay penalties, here are the steps to follow to request penalty relief:

#1:  Get background information to evaluate if you qualify for penalty relief:  in this step, you need to gather the information needed to evaluate if you qualify for penalty relief and which type of relief to request.  Information is needed from both the IRS and the taxpayer to understand options:

IRS account information:   there are 3 items to get from the IRS- compliance history (all returns filed, balances paid in a collection agreement that is in good standing), penalty history (penalties assessed and/or abated in prior years), and the specific penalties assessed that require relief.  This information will be needed to evaluate whether you qualify for First Time Abatement (FTA).  Also, the compliance history and status will be relevant in a reasonable cause argument.

Taxpayer information:    the taxpayer needs to create a timeline of events that cause the noncompliance.   The taxpayer will need to provide an explanation of how the event(s) were unforeseen and outside of their control – and how they caused the noncompliance (late filing or payment).  The taxpayer will need to gather third-party evidence to support their argument.   The taxpayer will also need to show how other areas of their life were affected by the unforeseen circumstances.

#2:  Fix any immediate noncompliance issues:   taxpayers should not proceed with abatement if they are not in compliance.   That means filing all required back returns and making sure they are in good standing with any back balances owed.    

#3:  Determine penalty relief method:   the options are usually to request FTA or reasonable cause. The taxpayer can also request automatic relief if the IRS did not identify the taxpayer as being affected by a Presidentially-declared disaster area.  Most taxpayers request FTA or reasonable cause relief. Taxpayers always need to evaluate FTA First. Any request is first evaluated for FTA, even though the taxpayer requested reasonable cause.  However, if the taxpayer does not qualify for FTA, they can request reasonable cause relief.   

#4:  Request relief:    FTA can be done by phone.  Contact the IRS and ask for FTA – show the IRS that you had no penalties in the three prior years and that you are currently compliant. Reasonable cause abatement should be requested via Form 843 or a penalty abatement request letter.  The request should clearly state the years and forms involved, and the penalties that are requested to be abated.  The request should also state the facts that show the unforeseen circumstances outside of your control that caused the noncompliance. The request should also provide specific dates and facts that show the reasonable cause, with supporting evidence to prove your argument.  All requests require that the taxpayer attest that all facts presented are accurate, under penalties of perjury.

#5:  Obtain abatement or appeal any adverse determination:  the IRS will issue their determination. FTA requests have an immediate phone determination.  Reasonable cause requests take about 2-3 months for an IRS response.  The IRS determination can be a denial, partial denial, or a full allowance.   Any denial can be appealed to the IRS Service Center Penalty Appeals Coordinator.   The taxpayer has 60 days to appeal the adverse determination.  In reality, because most penalty abatement requests are informal, the IRS will accept an appeal that is filed past the 60 days.  Once the appeal is requested, the taxpayer will get an opportunity to provide their complete circumstances and argument as well as more evidence to an IRS appeals officer.  If the denial is sustained, the taxpayer must pay the penalty and file a claim to re-argue the case against the IRS in court.  This is not a practical remedy for most penalty situations.

#6:  Confirm the penalties were abated:  if the agreement reached on penalty abatement, the taxpayer should follow up to make sure the penalties were abated.  Taxpayers should review their specific account transcripts to make sure the penalties were abated.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

 

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

 

Advance Tax Relief is rated one of the best tax relief companies nationwide.

#FreshStartInitiative

#OfferInCompromise

#TaxPreparation 

#TaxAttorneys

#TaxDebtRelief

TAX TIPS FOR STUDENTS WORKING THIS SUMMER - 2021

During the summer many students focus on making money from a summer job. They may want to gain work experience, earn some spending money or help pay for college. Here are some facts all student workers should know about summer jobs and taxes.

Not all the money they earn will make it to their pocket because employers must withhold taxes from their paycheck.

New employees: Employees – including those who are students – normally have taxes withheld from their paychecks by their employer. When anyone gets a new job, they need to fill out a Form W-4, Employee's Withholding Allowance Certificate, and submit it to their employer. Employers use this form to calculate how much federal income tax to withhold from the new employee's pay. The Withholding Estimator on IRS.gov can help a taxpayer fill out this form.

Self-employment: Students who take on jobs like baby-sitting, lawn care or gig economy work are generally self-employed. Money earned from self-employment is taxable, and these workers may be responsible for paying taxes directly to the IRS. One way they can do this is by making estimated tax payments during the year.

Tip income: Students who earn tips as part of their summer income should know tip income is taxable. They should keep a daily log to accurately report tips. They must report cash tips to their employer for any month that totals $20 or more.

Payroll taxes: This tax pays for benefits under the Social Security system. While students may earn too little from their summer job to owe income tax, employers usually must still withhold Social Security and Medicare taxes from their pay. If a student is self-employed, Social Security and Medicare taxes may still be due and are generally paid by the student.

Reserve Officers' Training Corps pay: If a student is in an ROTC program, and receives pay for activities such as summer advanced camp, it is taxable. Other allowances the student may receive – like food and lodging – may not be taxable. The Armed Forces' Tax Guide on IRS.gov provides details

NEED HELP WITH OFFER IN COMPROMISE, TAX SETTLEMENTS, TAX PREPARATION, AUDIT REPRESENTATION OR STOP WAGE GARNISHMENTS?

 

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

BBB A+ RATED

CALL (713)300-3965

 

Advance Tax Relief is rated one of the best tax relief companies nationwide.

#FreshStartInitiative

#OfferInCompromise

#TaxPreparation 

#TaxAttorneys

#TaxDebtRelief

HIGHER EDUCATION TAX CREDITS YOU SHOULD KNOW

 HIGHER EDUCATION TAX CREDITS YOU SHOULD KNOW

As a new school year approaches, students are considering what classes they need to take and how much the classes will cost. Whether it's community college, a trade school, a four-year university or an advanced degree, higher education is expensive. The good news is tax credits can help offset these costs.

These credits reduce the amount of tax someone owes. If the credit reduces tax to less than zero, the taxpayer could even receive a refund.

Taxpayers who pay for higher education in 2021 can see these tax savings when they file their tax return next year. If taxpayers, their spouses or their dependents take post-high school coursework, they may be eligible for a tax benefit.

NEED HELP WITH OFFER IN COMPROMISE, TAX SETTLEMENTS, TAX PREPARATION, AUDIT REPRESENTATION OR STOP WAGE GARNISHMENTS?

 

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

BBB A+ RATED

CALL (713)300-3965

There are two credits available to help taxpayers save money on higher education, the American opportunity tax credit and the lifetime learning credit. Taxpayers use Form 8863, Education Credits, to claim the credits.

Here are some important things taxpayers should know about these credits.

The American opportunity tax credit is:

Worth a maximum benefit of up to $2,500 per eligible student.

Only for the first four years at an eligible college or vocational school.

For students pursuing a degree or other recognized education credential.

Partially refundable. People could get up to $1,000 back.

The lifetime learning credit is:

Worth a maximum benefit of up to $2,000 per tax return, per year, no matter how many students qualify.

Available for all years of postsecondary education and for courses to acquire or improve job skills.

Available for an unlimited number of tax years.

To be eligible to claim either of these credits, a taxpayer or a dependent must have received a Form 1098-T from an eligible educational institution. There are exceptions for some students.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

 

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

 

Advance Tax Relief is rated one of the best tax relief companies nationwide.

#FreshStartInitiative

#OfferInCompromise

#TaxPreparation 

#TaxAttorneys

#TaxDebtRelief