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You did not file your tax returns and now you owe the IRS a lot of money in back taxes. So, what is going to happen after? The IRS will be sending you letters indicating the need to collect money for lost revenues. The first couple of letters may not seem important yet but the final notice would show the severity of the situation. Once you receive the final letter and it tells about implementing a tax lien against you, then you’re in for a nightmare.
How bad the situation can be? There is a high chance that by the time you get the final notice, the lien has already taken effect. Even if the final notice says that you have 10 days to either pay the tax debt in full, or set up an offer in compromise, still the damage has been done. So, your credit is now in danger.
Remember that the most common lien filed by the IRS is the one that is placed on your credit. It makes it impossible to buy anything using your credit. The ability to purchase a new car, refinance mortgage, and a loan is taken away from you. Having a tax lien filed against you practically destroys your credit score. So, avoid tax lien by not ignoring the notice letters from the IRS and paying taxes on time.
A tax lien is the first action used by taxing authorities such as the IRS, to make a claim against a property of a delinquent homeowner. They do this to secure payments of a tax debt. But first, the IRS notifies the homeowner of the unpaid taxes via mail. If the person does not act on it immediately within ten days, then a tax lien is going to be issued. This action also notifies the government’s public records office.
Here are some options for a homeowner who has a tax lien:
Payment Plan Set Up
Troubled times would be under control when a payment plan or Offer in Compromise is set up with the IRS. This works best with a tax resolution specialist that makes it quite easy for a homeowner to resolve his tax issues.
Pay the Tax Lien
Deal with tax lien by paying the back taxes in full amount plus the interest and other fees. Doing so can save property and assets.
The second option is the best move to take for the homeowner to preserve his property. Also, it avoids the hassle of dealing with a damaged credit report.
You can apply for a surety bond. What is it exactly? A surety bond cost as much as the payoff of the tax lien, which is very expensive by the way. However, once the bond is given, the Internal Revenue Service would release the Federal tax lien.
You can let the Internal Revenue Service know the situation, if there are special instances wherein the filing of the lien causes hardship. Situations that arise from it might change the circumstances in some cases. Just hope though that the Internal Revenue Service would provide due consideration.
Review your tax returns. File an amended tax return if you see that the liability is not correct, and you’ve just realized that there is a mistake on it. The Internal Revenue Service can then correct the issuance of the lien.
You may also contact the Taxpayer Advocates Office that can help you when there’s something not correct about the filing. This helps because the Internal Revenue Service can then look into the situation.
Owing the IRS a tax debt can be a very troublesome experience, even before they take action against you. And once you are going to receive letters of notices of tax debt from them, you need to do something about it right away.
The IRS is very aggressive when it comes to tax collection. You must know this by now. This is why you must take care of your tax debt without second thoughts. Take note that they send out three notices. When you get the third one, it means your time is up. The third letter demand payments from you. If you do not pay attention to it, the IRS would put a tax lien on your credit.
Put in mind that an IRS tax lien totally messes up your credit. It would leave a mark on your credit report, and you must pay your tax debt in order to remove it. Furthermore, a lien on your property means that it would be sold at a tax sale, in order for the IRS to collect the lost revenues from you. Real estate investors are going to attend the auction of tax sale properties. Then, a tax lien certificate is going to be given to the investor who wins the bidding of your property. You would then pay him for the back taxes owed plus interest and fees.
Prepare yourself against IRS tax liens. As much as possible, pay your taxes on time. Also, do not ignore their letters if ever you receive one.
Did you know that if you have less than $10,000 in debt a lien cannot be requested by the IRS? Yes you are in a safe zone for now. But nevertheless, a form 1277 can be request by you in order to have the lien removed.
Before a request for removal of a lien is done, there are some basic requirements that must be accomplished. Here they are:
-Federal tax deposits and valued tax payments must be up-to-date.
-Tax obligations are fulfilled and your lien would be released in the specified time.
-For up to 3 years, you are to comply all individual as well as business information returns, and diligently met filings.
These are some of the basic requirements that you must remember. Accomplish them and you can request for a removal of the tax lien.
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