Critical Information that You Need to Know to Avoid A Notice of Federal Tax Lien
You will receive notice of a tax lien if you owe taxes and the IRS’s attempt to collect them from you has failed. A tax lien gives the IRS the option of filing a notice in all the counties you live, work, and/or own property in stating that you have a tax debt. This lien is attached to all your assets and could affect your credit and your ability to sell or borrow against your assets. If your IRS Problems have come to this point, now is the time to get help.
Initially, the IRS sends out a notice requesting immediate payment. If you ignored this initial mailing for one reason or another then you should have also received subsequent mailings until the dreaded final notice. This notice gives you 30 days from the date of the letter to pay your taxes. You will not receive another notice and should expect action from the IRS anytime after this 30-day period.
If you are unable to pay your taxes in full at this time, you have two options: an extension of time to pay or an installment agreement.
Extension of Time to Pay
You will need to fill out Form 1127(Application for Extension of Time for Payment of Tax). To qualify for this option, you will have to prove that you are entitled to an extension. The IRS typically denies an extension because most people do not know how to provide this proof. You must show:
• That you are unable to pay on time due to circumstances beyond your control even though you did your best to plan for your taxes
• That you will not be able to pay your necessary living expenses and will encounter economic hardship if you pay on time
• That you agree to give the IRS security for the unpaid tax which means it will file a tax lien(which will be the IRS’s next course of action anyway)
If you are granted an extension, you may get up to 6 months more to pay your taxes. One benefit of an extension is that you will not be assessed penalties on your tax debt. You will, however, be assessed interest during the extension period. Another benefit is that the IRS cannot execute any other enforcement action during this time helping you to avoid a tax levy as long as you pay your debt by the due date.
You may also simply call the IRS at the number listed on the most recent notice and ask them for some additional time to pay. If you ask for a 120 day extension to pay, it will almost always be granted.
Installment Agreement
If you are denied an extension, your next step is to obtain an installment agreement. Form 9465(Installment Agreement Request) will need to be filled out. This form should be submitted along with your tax return.
The IRS cannot deny an installment agreement if you meet all of the following criteria:
• You owe no more than $10,000 (not including interest and penalties assessed)
• You have not failed to file, failed to pay, or received an installment agreement within the previous 5 years
• You can prove that you cannot financially pay the tax on time (agreeing to provide a financial statement is essential)
• You agree to complete payment within 3 years
• You will meet all your tax obligations during the agreement
Obviously, your best course of action would be to avoid a tax lien. Our office can guide you through the paperwork and answer any questions you may have about tax liens, extension of time to pay, or installment agreements. Contact us today tollfree at (888) 438-6474 so that you can get the IRS Help that you need.
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Comments on Critical Information that You Need to Know to Avoid A Notice of Federal Tax Lien
I recently owed some taxes, interest and penalties. I sent a check for the tax and interest and asked for cacellation of the penalty. I received a letter back agreeing and telling me my obligation was fulfilled.
A month later I get a letter from a different office of IRS saying they want the penalty and more interest. I responded with copies of the discharges obligation from the other office, sent by registered mail. They ignored that, and instead demanded immediate payment, or else…
The next letter (no intermediate mailings received)from the IRS demanded immediate payment within 10 days (not 30), threatening a lien.
I will now have to hire a lawyer to fight them on a debt already paid. Welcome to America.
David,
I can really sympathize with what a frustrating experience you are having in trying to deal with the IRS regarding this matter. In my opinion, you have a great opportunity to utilize the services of the Office of Taxpayer Advocate. You can learn more by going to the IRS website at http://irs.gov and looking up the Local Taxpayer Advocate for your state. They should be able to help you free of charge. The real problem here is that the computer is kicking out the notices after a human being has decided that you deserve a break on the penalties. Ask the Taxpayer Advocate to clear this up for you. In order to get it started, you will need to fill out Form 911 (you can find it on the IRS website) and fax it to your local Taxpayer Advocate office. Within a few days someone will call you and begin to work toward the resolution of this problem.