IRS Tax Problem Information

IRS Federal Tax Liens

The IRS has certain tools at their disposal when they are seeking to collect past due taxes. One of the most common types of collection methods is the Tax Lien, and corresponding Notice of Federal Tax Lien. Typically, a Federal Tax Lien is put into effect when the IRS has been repeatedly unable to collect a debt from a taxpayer or when they have lost communication with the tax payer and have decided to escalate their collection of the past due taxes. More importantly, the IRS has the authority to implement these methods without any prior notice so the taxpayer is often caught off guard.

A Federal Tax Lien essentially gives the U. S. government the right to the taxpayer's property as security for a tax debt, preventing the owner from being able to sell or refinance that asset without authorization or release by the Internal Revenue Service.

Releasing an IRS Tax Lien generally requires coming to some kind of repayment agreement with the IRS; for instance, if a taxpayer decides to file an Offer In Compromise, then the IRS may release the Tax Lien while the taxpayer prepares and submits that Offer In Compromise. However, the IRS will not just release a Tax Lien simply because a tax payer requests that they do. In most cases, expert tax assistance is required to present the financial condition to the IRS on the taxpayer's behalf and demonstrate that he or she is willing to settle the outstanding tax debt.

If you have received a Notice of Federal Tax Lien, then it means the IRS has knowledge of your tax debt, and you must take immediate action to resolve it. To receive your free federal tax lien consultation, Click Here.

IRS Lien Subordination

Under this method the delinquent taxpayer is able to secure financing for the purpose of making a payment towards their federal tax liability. A Federal Tax Lien gives the IRS a secured interest in any property that is subject to the Lien. Because of this secured interest, prospective banks are not willing to loan money to a taxpayer with a Federal Tax Lien unless they can obtain a security interest superior to that of the IRS Lien. By subordinating the Lien, the IRS allows a lender to take a priority interest ahead of any IRS claims on value of the property. In return, the IRS will require that it receive ALL proceeds in excess of sales costs and amounts due to Lien holders who are a priority to the IRS (the bank that holds your loan, etc...), up to the amount of taxes you owe. While there is no specific IRS Form for Subordination or discharge of a Federal Tax Lien, the process is very specific. As long as the IRS is receiving the full proceeds (other than closing costs) from the sale or refinance of a property, the IRS will usually grant a Lien Subordination.

This procedure, though it is quite common, is sometimes difficult to achieve without assistance from a tax professional. The first thing that needs to be done is finding a bank to fund your loan. Ask us if you need a referral to a lender. Once you have your financing application in place, we will need to supply the IRS with required information on your property and the impending loan. Once this information is delivered to the proper department within the IRS, your subordination should be granted. The normal processing time for subordination may be as long as 30 to 60 days. However, when there is danger of losing the loan, the IRS may expedite the certificate at our request. To further discuss your tax matter related to IRS lien subordination, Click Here.

IRS Wage Garnishment and Levy

It is important to understand that levy, garnishment, or wage attachments are actually all the same thing. When the IRS files a levy it is as a last resort. Communications between the taxpayer and the Internal Revenue Service have ceased and the IRS has no alternative but to employ additional efforts to collect. The IRS tax levy is a demand made by the IRS on a third party; an employer, a bank, a financial or securities firm or really anyone else they can locate that has possession of assets owned by the taxpayer who has failed to remit taxes due. The most common type of IRS levies or garnishments are on salary and wages, and bank accounts held by the tax payer. There are differences in the nature of the tax levies and the way they are administrated on these asset classes.

Wage levies are ongoing. Once the employer receives the IRS wage levy he is obliged to continue to withhold wages until the wage garnishment is satisfied or the wage levy is released, whichever occurs first. An IRS wage garnishment can be one of the most financially devastating collection tools in the IRS arsenal. The amount which remains for the “taxpayer” to live on is rarely enough to even cover the most basic of living expenditures. If you are the victim of an IRS wage attachment and are in immediate need of a wage garnishment release, our tax specialists are ready to assist Click Here.

As of this writing, the IRS may withhold all wages due above $3.83 per hour for a single individual with no dependents. That is far below the minimum wage. One must note, however, that the taxpayer is liable for income tax on the full amount of wages paid even though some wages were withheld.

As with an IRS bank levy, the employer is obligated to hold the funds until 21 days from the date of levy has expired, not counting the day the levy was received and implemented. In the instance of a bank levy on a time deposit, the bank must deduct the 10% penalty for early withdrawal if it applies and remit the balance to the IRS. In essence, the IRS can break into your certificate of deposits or other time deposits and take the money while the bank assesses the penalty to you. It is very difficult to retrieve funds impounded by the employer or financial institution. It can be done, but in most cases that will require the intervention of the Taxpayer Advocates Office.

The IRS levy will be satisfied and the process is completed when all tax, penalty and interest is paid in full, or when the IRS withdraws or releases the levy order, whichever comes first. The levy order may be withdrawn when the service is satisfied and the taxpayer is attempting to comply with his/her tax obligations. Compliance with that tax obligation may be achieved by paying the tax, entering into an installment agreement, submitting an Offer in Compromise or being placed in non-collectible status (because the taxpayer does not have enough money to pay the back taxes). A n IRS tax levy may result in the individual being unable to make other important payments such as home loan, car payments or child support obligation. As a result, any documentation received from the IRS or any tax authority that indicates a levy or seizure of assets should be given immediate attention . If you have received a Notice of Intent to Levy and require assistance to stop this IRS tax levy, Click Here.

Missing Records

It is a common occurrence that taxpayers do not file tax returns because they are missing records needed to file these returns. There are several solutions to this problem.

The I.R.S. maintains a file of your records for the past 6 years that contains your W2's, 1099's and 1098's (mortgage interest paid) filed under the name of individual taxpayers. If you require records for 7 or more years back it is possible in some instances to retrieve missing records by filing Form 4506 - Request for Copy of Tax Return for the fee of $39 per year.