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When you owe a significant amount of money in taxes, including back taxes, then the IRS has many actions it can take to get repaid, including implementing a lien or levy on your assets. If this happens to you, you are not powerless against the IRS. You can get your lien or levy removed and discover a better way to reduce your tax liability.
A tax lien is an official declaration that the IRS has a legal right to the property because of your federal tax debt. It occurs after you have neglected to pay your tax debt by the deadline. A lien does not involve actually seizing the property; instead, it only secures the interest in the property and signifies that the federal government has a priority over any other creditors. A tax levy, on the other hand, is the actual taking of your property. A tax lien affects you by being attached to any and all assets, including future assets you may acquire during the life of the lien. It also can affect your credit and limit the ability to sell or refinance any of your assets until you have repaid your debt.
By definition, a levy is a legal seizure of your assets or property in order to repay a debt. Any collection agency can impart a levy on an asset, although only the IRS can do so without a court order. Any property or asset can have a levy, including your house, car, boat, bank account, wages, retirement accounts, bank accounts, rental income, the cash loan value of a life insurance policy, or any other asset. The IRS can freeze a bank account, seize property, and otherwise take ownership of any assets to fulfill your debt, other than a list of exempt assets.
The IRS will enact a tax levy on your property after you have neglected or refused to pay any taxes owed upon receipt of the Notice and Demand for Payment. They will inform you of the intention with a Final Notice of Intent to Levy and Notice of your Right to a Hearing a minimum of 30 days prior to its start. A levy ends when you have fully repaid your federal tax debt, the statute of limitations has ended, or you have the levy removed. If the tax levy creates a financial hardship for you, then you can apply to have it removed, as well as apply for other tax debt relief solutions.
The easiest way to remove a tax levy or a tax lien is to repay your tax debt in full. Your levy or lien will be discharged within 30 days of receipt of your payment. However, most people who owe significant amount of tax debt cannot afford such a large payment. If you believe that the amount you owe is incorrect, or the IRS has issued a lien or levy in error, you have the right to appeal the process. You also have other options for removing a levy or lien and settling your tax debt.
For a lien, you can apply to have a discharge of property, which removes your lien from a specific property. You can also apply for subordination, which will allow other creditors priority over the IRS, which may help you secure a loan or mortgage. Finally, you can apply for a withdrawal of the tax lien. Even if the tax lien is removed, you will still be liable for the full amount of federal tax debt unless you take other actions. Another option for removing a federal lien on your assets is by applying for an Installment Agreement or an Offer in Compromise. These are two tax relief solutions that can help you to negotiate a way to pay back your federal tax debt without entering a financial hardship or harming your credit. You can also apply for these programs to remove a tax levy against any of your property. A tax levy can also be removed due to financial hardship.
The tax professionals at Fidelity Tax Relief have been helping people negotiate federal tax settlements for years. They will discuss your case with you and help you decide upon the right course of action. They also know the right forms to submit to apply for the removal of a tax lien or tax levy. They deal directly with the IRS on your behalf so that you do not have to do it. They also ensure that all forms are filled out correctly, reducing any administrative errors that may cause an appeal to be rejected. Not only can they help to remove any liens or levies against your property, but they can also discuss tax relief solutions with you that can minimize your debt and help you to once more be in compliance with the IRS.