When personal, business, employment or payroll taxes are not paid, the IRS can file a Federal Tax Lien against an Individual or a Business. The liens will also carry interest and penalties and it can be a difficult situation to resolve. At the office of Ira J. Metrick in Freehold, NJ, we can assist you with federal tax lien resolution.
It’s a popular misconception to paint the IRS as “the bad guys,” but, the IRS exists for the benefit of all, and is open to compromise. Our office can represent you to resolve the lien with the IRS through a compromise.
We start with a thorough analysis of your financial situation to determine what you can afford to pay. We also analyze the taxes, interest and penalties to see if any amounts can be eliminated based upon Statute of Limitations, Penalty Abatement, or because you do not owe the taxes.
You may be eligible for loan Offer in Compromise, which allows you to pay less than the total owed, or you may qualify for an Installment Agreement which permits you to pay the off the lien over several months.
Here is some helpful information about federal tax liens and what we can do for you in terms of IRS tax lien release.
What is a Federal Tax Lien?
A federal tax lien, also called an IRS lien, is a legal claim to your property created when the IRS assesses a tax debt. Even though the lien may not be recorded with the County to put the public on notice, once the a tax debt is assessed, the IRS has an “Invisible Lien.”
The IRS may file a physical Notice of Federal Tax Lien at any time to protect the government’s interests. The Notice of Federal Tax Lien puts the world on notice that the government has a right to your assets, including any assets you acquire after the lien is filed. A lien can be filed even if a hearing is requested to contest the amount the IRS claims is due. (It is possible to stop a lien, or have it removed if you reach an agreement with the IRS for payment.)
Federal Tax Lien Important Notices Timeline
- CP 14 Balance Due Notice – A demand for payment that is issued within a few days of receiving a tax return that shows money is due.
- CP 501 Important Notice – Arrives approximately 10 days after CP14. Advises that money is due and notice that a federal tax lien can be filed if payment is not made within 10 days.
- CP 503 Immediate Action Required – Arrives approximately 5 weeks after CP 501. Notice that penalties and interest are continuing to increase.
- CP 504 Urgent! Notice of Intent to Levy – Arrives approximately 5 weeks after CP 503. Notice that the IRS is planning to levy (take) state refunds or other property. There is also a reminder that a Federal Tax Lien may be filed. (Your bank account and wages will not be affected at this point.)
- Letter 1058 (also known as LT 11 or CP 90) Final Notice of Intent to Levy – Arriving approximately 5 weeks after CP 504, it is notice of the IRS’s intent to levy your bank accounts, wages and/or other assets.
You will also be notified of your right to request a Collection Due Process Hearing (CDP) within 30 days. If this hearing is requested within this time frame, there will be no levy until the process has concluded. Additionally, you will also have the right to have the US Tax Court review the decision if you do not agree with it.
Please note that if the request for the hearing is made AFTER 30 days, you may still be entitled to an equivalent hearing, but you will lose the right to the US Tax Court Review if you disagree with the outcome and the IRS may levy your assets while you await your hearing. This means you would be forced to pay the tax in full and then fight to get it refunded.
Levy/Seizure Based On Federal Tax Liens
If the Federal Tax Lien is not paid; or if a hearing is not timely requested; or if some other payment arrangements are not made (such as an Installment Agreement (IA) or Offer in Compromise (OIC)), the IRS can take collection actions against your property, or rights to property, including:
- Social security benefits
- Real estate
- Business assets
- Bank accounts
- Accounts receivable
- Any other income
What Is A Levy/Seizure?
A levy is to get cash from a bank account, investment account, or wages, while seizure is the act of taking property, such as cars, jewelry, real estate, or other valuable assets.
Once the levy is served on the financial institution, the funds must be held for 21 days to allow time to argue that it should not occur.
TYPES OF TAX LIEN RESOLUTIONS AND OTHER SERVICES
Offers in Compromise (OIC)
An offer in compromise is an agreement with the IRS that settles your liabilities for less than the full amount owed. Note that this option is usually only available to those who cannot repay their debts through another method, such as installments.
Flexible Offers in Compromise are a key part of the IRS Fresh Start Program, started in 2011 to help struggling individual and small business taxpayers clear up their tax issues.
Installment Agreements (IA)
Installment agreements are payment plans for the IRS that allow you to pay the taxes you owe within a designated period of time.
A penalty abatement is when the IRS waives a portion (or all) of a penalty if the taxpayer can qualify for a First Time Penalty Abatement or show reasonable cause for failing to fulfill their tax obligations.
Innocent Spouse Relief
Innocent Spouse Relief can protect you from additional taxes you owe due to your spouse failing to report income correctly (or at all.)
Payroll Taxes / Trust Fund Recovery Penalty (TFRP)
A trust fund recovery penalty is a fine against an employer, or other company representative, who has responsibility to pay employees and submit the proper taxes to the IRS. This can be for an employee’s income taxes or Federal Insurance Contributions Act (FICA).
Contact Ira J. Metrick Today To Discuss Federal Tax Lien Resolution
If you are in need of assistance with a federal tax lien resolution, please contact our Freehold, NJ office today.