What is a Federal Tax Levy?
A tax levy is the legal seizure of a taxpayer’s property in order to satisfy an outstanding tax debt. While levies are not the same as liens, a levy has a more direct impact on personal property in that it allows for the immediate seizure of that property to settle a tax debt.
Many individuals are unaware of collection alternatives or they wait too long to see legal help after receiving a Final Notice of Intent from the IRS (also known as Letter 1058 or Notice LT11). This letter, which could be considered a final warning from the IRS, allows taxpayers the opportunity to request a due process hearing for the debt and potentially avoid the tax levy. However, in order to avoid losing the right to appeal, it is important to act quickly upon the receipt of this letter by requesting a hearing.
What is a Federal Tax Lien?
When the IRS has assessed a tax against an individual, they will send a Notice of Demand for Payment. Failure to pay this bill in full by the demand date will result in the IRS filing a Notice of Federal Tax Lien against that individual. This action will put other creditors on notice about the government’s legal right to the debtor’s property; as well as all property and assets acquired thereafter. Because a tax lien is a public filing, it also impacts the taxpayer’s credit score. Like a tax levy, appeals can be filed under the collection due process provision, or under the CAP program if that Tax Lien has not filed.
An IRS Tax Lien may can be removed in the following ways:
- Paying the liability in full should result in the release of the lien within 30 days
- Filing an application for a Certificate of Discharge, which can remove a specific piece of property from the lien.
- Applying for a Certificate of Subordination, which can make it easier to get a mortgage or other loan on a property in which the IRS has interest.
- An application for Withdrawal of the Notice of Federal Tax Lien could also result in the removal of any public notice about the tax lien filing.
- The Fresh Start Initiative is another option which our tax attorneys can explain in full.
Avoiding a federal tax lien or levy will be easier if all taxes are paid in full and on time. At the very least, one should never ignore a letter of correspondence from the IRS. Legally, there are plenty of options available to help resolve and avoid the collection of tax liens and levies.
An experienced tax attorney at Dilendorf Law Firm will explain the taxpayers’ rights regarding the enforced collection actions taken by the IRS, and help our clients avoid the financial implications of such actions.
Tax Levies & Liens
Dilendorf Law Firm
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When our clients are facing a tax levy or tax lien, the attorneys at Dilendorf Law Firm can prepare a legal defense against the IRS to protect their legal rights and financial liquidity.