How to Respond to a Tax Lien
Do not delay or ignore it., Confirm the lien is valid and accurate., Research your appeal or withdrawal options., Determine if you can pay of the tax debt., Establish your tax debt solution and follow through., Whatever your solution may be, the...
Step-by-Step Guide
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Step 1: Do not delay or ignore it.
May seem obvious, but it is the most important step.
If you have been putting off a tax problem and have received a notice of a tax lien, you've now reached a point where it's in your best interests to get in contact with the Internal Revenue Service or State taxing authority first.
You can easily get in touch with them directly or use a tax resolution expert to take care of the communications for you.
Facing up to a back tax issue can be stressful, but not dealing with a tax problem is only going to make the situation worse.
Remember, a tax lien is not the final step in collections. -
Step 2: Confirm the lien is valid and accurate.
Once you've received a notice, you should contact the taxing authority and verify the lien.
Do you owe taxes? Do you owe for the type of taxes listed on the lien? I know of a restaurant who was sent a bill from the Internal Revenue Service for excise taxes for tanning beds, it may get on in the kitchen, but there’s no tanning beds.
Don’t just assume that the lien is correct.
Verify your records and compare to the taxing authority that what they indicate you owe, you actually owe. , If you have sufficient proof, a reasonable cause, or other mitigating circumstances (such as a bankruptcy) you may qualify to appeal or even have the lien withdrawn completely.
In certain instances the IRS may allow a temporary lift of a lien, often when it is in the best interest of both you and the IRS, such as selling property to use the funds to pay the tax debt.
Many individuals (and occasionally some less scrupulous tax attorneys) will file an appeal in error and doing so can make tax relief more difficult by extending certain statutes of limitations. , If you have the means available, often the best option available may be to pay the debt immediately so that the lien will be released.
If you need to sell assets in order to help pay the tax debt, the IRS will often work with you to release the lien.
Depending on the amount of the tax lien you may want to consider your credit or loan options because you will often pay less to a bank or lending institution then you will the Internal Revenue Service or State taxing authority on a payment plan. , It may feel like you are stuck with no options when you have a tax debt.
This is why working with a tax resolution expert can be extremely helpful.
A qualified expert should know the options available in your situation and what method will best absolve the debt and get the tax lien released.
And while the Revenue Officers likely have this information too, you can't always expect them to give you the answers (remember, their job is to get the debt paid in full as fast as possible.) , Get your paperwork in on time.
Make all deadlines you establish with the taxing authority and provide your paperwork in a method that is verifiable (you don't want your records getting lost in the mail.) If you receive a request or notice from the IRS or state, it is important you are responsive.
Even though you may have worked out a method of resolving your tax debt, there is often a lot of paperwork and communication that needs to be continued.
It's entirely feasible that a person or business can fulfill these responsibilities on their own, but again a good tax resolution expert should be able and willing to take care of these items at a reasonable cost. -
Step 3: Research your appeal or withdrawal options.
-
Step 4: Determine if you can pay of the tax debt.
-
Step 5: Establish your tax debt solution and follow through.
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Step 6: Whatever your solution may be
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Step 7: the final step is to keep up with the process.
Detailed Guide
May seem obvious, but it is the most important step.
If you have been putting off a tax problem and have received a notice of a tax lien, you've now reached a point where it's in your best interests to get in contact with the Internal Revenue Service or State taxing authority first.
You can easily get in touch with them directly or use a tax resolution expert to take care of the communications for you.
Facing up to a back tax issue can be stressful, but not dealing with a tax problem is only going to make the situation worse.
Remember, a tax lien is not the final step in collections.
Once you've received a notice, you should contact the taxing authority and verify the lien.
Do you owe taxes? Do you owe for the type of taxes listed on the lien? I know of a restaurant who was sent a bill from the Internal Revenue Service for excise taxes for tanning beds, it may get on in the kitchen, but there’s no tanning beds.
Don’t just assume that the lien is correct.
Verify your records and compare to the taxing authority that what they indicate you owe, you actually owe. , If you have sufficient proof, a reasonable cause, or other mitigating circumstances (such as a bankruptcy) you may qualify to appeal or even have the lien withdrawn completely.
In certain instances the IRS may allow a temporary lift of a lien, often when it is in the best interest of both you and the IRS, such as selling property to use the funds to pay the tax debt.
Many individuals (and occasionally some less scrupulous tax attorneys) will file an appeal in error and doing so can make tax relief more difficult by extending certain statutes of limitations. , If you have the means available, often the best option available may be to pay the debt immediately so that the lien will be released.
If you need to sell assets in order to help pay the tax debt, the IRS will often work with you to release the lien.
Depending on the amount of the tax lien you may want to consider your credit or loan options because you will often pay less to a bank or lending institution then you will the Internal Revenue Service or State taxing authority on a payment plan. , It may feel like you are stuck with no options when you have a tax debt.
This is why working with a tax resolution expert can be extremely helpful.
A qualified expert should know the options available in your situation and what method will best absolve the debt and get the tax lien released.
And while the Revenue Officers likely have this information too, you can't always expect them to give you the answers (remember, their job is to get the debt paid in full as fast as possible.) , Get your paperwork in on time.
Make all deadlines you establish with the taxing authority and provide your paperwork in a method that is verifiable (you don't want your records getting lost in the mail.) If you receive a request or notice from the IRS or state, it is important you are responsive.
Even though you may have worked out a method of resolving your tax debt, there is often a lot of paperwork and communication that needs to be continued.
It's entirely feasible that a person or business can fulfill these responsibilities on their own, but again a good tax resolution expert should be able and willing to take care of these items at a reasonable cost.
About the Author
Frank Wells
Professional writer focused on creating easy-to-follow cooking tutorials.
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