When you're facing a tax liability and you can't resolve it within a reasonable amount of time, the authorities will file liens (or tax warrants for some states) as an escalating step in the collections process. A lien notifies the public that you have a tax liability. It secures their interest in your property, receivables, tangible and intangible assets. Recent reports show the IRS has been increasing the use of Federal Tax Liens to assist in the collection of back taxes. If you've received one you should know that you do have options, and it is in your best interest to act quickly. To ensure that you have the best possible outcome, follow these initial steps in getting your tax problem resolved.
1) Do not delay or ignore it
May seem obvious, but it is the most important step. And if you have been putting off a tax problem and have received a notice of a tax lien, you've now reached a point where it's in your best interests to get in contact with the Internal Revenue Service or State taxing authority. You can easily get in touch with them directly or use a tax resolution expert to take care of the communications for you. Facing up to a tax issue can be stressful, but not dealing with a tax problem is only going to make a bad situation worse. Remember, a tax lien is not the final step in collections.
2) Confirm the lien is valid and accurate
Once you've received a notice, you should contact the taxing authority and verify the lien. Do you owe taxes? Do you owe for the type of taxes listed on the lien? I know of a restaurant who was sent a bill from the Internal Revenue Service for excise taxes for tanning beds, it may get on in the kitchen, but there's no tanning beds. Don't just assume that the lien is correct. Verify your records and compare to the taxing authority that what they indicate you owe, you actually owe.
3) Research your appeal or withdrawal options
If you have sufficient proof, a reasonable cause, or other mitigating circumstances (such as a bankruptcy) you may qualify to appeal or even have the lien withdrawn completely. In certain instances the IRS may allow a temporary lift of a lien, often when it is in the best interest of both you and the IRS, such as selling property to use the funds to pay the tax debt. Many individuals (and occasionally some less scrupulous tax attorneys) will file an appeal in error and doing so can make tax relief more difficult by extending certain statutes of limitations.
4) Determine if you can pay of the tax debt
If you have the means available, often the best option may be to pay the debt immediately so that the lien will be released. If you need to sell assets in order to help pay the tax debt, the IRS will often work with you to release the lien. Depending on the amount of the tax lien you may want to consider your credit or loan options because you will often pay less to a bank or lending institution then you will the Internal Revenue Service or State taxing authority on a payment plan.
5) Establish your tax debt solution and follow through
It may feel like you are stuck with limited or no options when you have a tax debt. And this is why working with a tax resolution expert can be extremely helpful. A qualified expert should know the options available in your situation and what method will best absolve the debt and get the tax lien released. And while the Revenue Officers likely have this information too, you can't always expect them to give you the answers (remember, their job is to get the debt paid in full as fast as possible.)
Whatever your solution may be, the final step is to keep up with the process. Get your paperwork in on time. Make all deadlines you establish with the taxing authority and provide your paperwork in a method that is verifiable (you don't want your records getting lost in the mail.) If you receive a request or notice from the IRS or state, it is important you are responsive. Even though you may have worked out a method of resolving your tax debt, there is often a lot of paperwork and communication that needs to be continued. It's entirely feasible that a person or business can fulfill these responsibilities on their own, but again a good tax resolution expert should be able and willing to take care of these items at a reasonable cost.
Every situation is different, but if you've received a notice of a tax lien follow these steps and you'll ensure the best possible outcome for your financial future.
Aaron Marx is a Managing Member of Safe Harbor Financial Consultants LLC a tax resolution firm based in Chicago IL. You can get more information about tax resolution services or visit their tax wiki for straightforward information about taxes and tax collections. Aaron also hosts a tax advocacy group on Facebook.
0 comments:
Post a Comment