{"id":959,"date":"2020-08-17T06:00:40","date_gmt":"2020-08-17T10:00:40","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=959"},"modified":"2024-04-25T23:20:29","modified_gmt":"2024-04-26T03:20:29","slug":"the-tax-lien-cometh","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/the-tax-lien-cometh\/","title":{"rendered":"The Tax Lien Cometh"},"content":{"rendered":"\n
Back Taxes Can Impact Your Real Estate Title. Here\u2019s How to Deal With Them.<\/em><\/strong><\/p>\n\n\n\n What happens when a taxpayer doesn\u2019t pay tax? If the\nInternal Revenue Service is slighted, it follows its age-old tradition and imposes\na tax lien on the person\u2019s property. Boats, financial accounts, the house \u2014 an\nIRS lien attaches to everything. And federal tax liens are resilient; they can\neven stay on the title through a homeowner\u2019s bankruptcy, if they were imposed\nbefore the bankruptcy was filed.<\/p>\n\n\n\n With the lien, the government isn\u2019t actually taking the\nproperty. But if the homeowner wants to sell the property, the government will\ntake its cut from the sale proceeds. <\/p>\n\n\n\n Concerned you might have a lien? You can check with the\nrecorder of deeds in the county where your home is, or review your debt records\non the IRS website. If you find yourself dealing with back taxes, find a way to\nmake good on the tax bill, or get the relief you need. <\/p>\n\n\n\n Here, we delve into the most frequently asked questions\nabout the impact of a lien on a taxpayer\u2019s home title, and steps the homeowner\ncan take to keep that title clean.<\/p>\n\n\n\n\n\n\n\n If you owe $10,000 or more in back taxes to the Internal Revenue Service, you\u2019re at high risk of being flagged for a federal tax lien<\/a>. Go online to see how much you owe the IRS<\/a> and pay the balance or request an installment plan. If you take no steps to work out the bill, the IRS will soon deploy its debt collection process<\/a>:<\/p>\n\n\n\n A lien creates enough trouble without even getting to the levy stage. Since 2017, the major consumer reporting firms no longer put liens in people\u2019s credit reports. But the IRS lien is still a public document, appearing in title searches and lenders\u2019 databases when the owner goes to sell or refinance the home. Meanwhile, the interest on the debt may be around 5%; the IRS adjusts its interest rate quarterly. Monthly IRS late fees<\/a> can accrue over time, too \u2014 up to a whopping 25% of the total debt. <\/p>\n\n\n\n For a comprehensive overview, refer to The IRS Collection Process<\/a><\/em> [PDF].<\/p>\n\n\n\n Beyond the lien process, the going gets rougher still. A levy is the actual seizure of assets \u2014 property, bank accounts, wages<\/a>. IRS levies have superpowers. They can take over a portion of a person\u2019s Social Security benefits<\/a>. They can get into retirement accounts, including IRAs. They can even pierce the homestead shield, because federal law overrules state provisions.<\/p>\n\n\n\n A homeowner who receives a Final Notice of Intent to Levy will have a right to a hearing<\/a>, but, if due process is followed, the owner could potentially endure an IRS seizure of the house<\/a> for a judicial sale. After taking out administrative fees and costs, the government would then use the sale proceeds to the satisfy the unpaid bill for back taxes. What if the house sale makes more money than the IRS needs to pay off your balance? Then, the IRS will send instructions on getting a refund. <\/p>\n\n\n\n Note that the Department\u00a0of State also gets involved in serious tax debt cases. It can turn down passport applications from homeowners \u201cwith a seriously delinquent tax debt\u201d \u2014 anything more than $52,000 in back taxes, penalties and interest. Perhaps most striking of all, the federal government has the authority to take away a valid passport<\/a> to be dead sure you\u2019re not going to abscond without handing over the loot!<\/p>\n\n\n\n Obviously, any part of this process is stressful and best\nstopped in its tracks. Step in as quickly as you can \u2014 before the IRS even\nknows you\u2019ll be late, if possible. If the tax deadline is approaching and the\nbill is overwhelming, file anyway, and pay any amount you can \u2014 as soon as you\ncan. Keeping the debt under the $10,000 limit will normally avoid a tax lien.\nUnfortunately, whenever payments are late, the taxes, interest, fees and\npenalties won\u2019t disappear. <\/p>\n\n\n\n You can consider:<\/p>\n\n\n\n The government might even agree to withdraw a lien already\nimposed, if: <\/p>\n\n\n\n Sometimes, a homeowner simply cannot pay at all, or doesn\u2019t\nthink the bill is fair or accurate. For these situations, there are several\nways to proceed.<\/p>\n\n\n\n Freeing up a home\u2019s title from a tax lien normally happens when the owner pays off the total owed, plus additional charges, including the fees requested by the county recorder\u2019s office that ultimately releases the lien. Once it is paid, the IRS has 30 days to release the lien. <\/p>\n\n\n\n Other lien release\nscenarios may include:<\/p>\n\n\n\n Yes, state tax\ncollectors can place a lien on their residents\u2019 assets. Every state enables local\ntax offices to impose tax liens and pursue tax sales of real estate. They might\ndo so to recover overdue property taxes or state income taxes, to name two\nmajor examples. <\/p>\n\n\n\n Tax lien rules, procedures, and statutes of limitations vary by state. Look up your\u00a0state tax authorities<\/a>\u00a0online to learn about them, and check with the county where the lien is recorded (where the house is) to find out about existing liens.<\/p>\n\n\n\n As the federal\ngovernment does, state government offices have plans available for paying\noverdue bills and getting liens released. Here again, the available plans are\nunique to each state.<\/p>\n\n\n\n Where do you start? Commercial\ntax relief companies support clients with lien releases and related matters. They\ngenerally allow free initial consultations. The rub? During the course of a\ncase, many of the for-profit firms charge hundreds, even thousands, of dollars.<\/p>\n\n\n\n This guide for Deeds.com<\/em> readers is general in nature, and the best approach in a specific case needs to be tailored to the individual. So, consider this guide a jumping-off point for you to carry out your own research. The IRS itself offers a useful set of resources through its online Taxpayer Advocate Service<\/a>. Cities offer low-cost or free legal aid through non-profits, too, such as this one in Cleveland, Ohio<\/a>. You may also seek assistance from your own tax professional if you use one.<\/p>\n\n\n\n Finally, always be sure to check the IRS site for updates in law, policy, and current fees and debt thresholds.<\/p>\n\n\n\n
<\/figure><\/div>\n\n\n\nWhat Is the IRS Tax Lien Process? <\/h2>\n\n\n\n
What Is the IRS Levy Process?<\/h2>\n\n\n\n
How Can I Derail the Tax Lien Process? <\/h2>\n\n\n\n
Can I Get the IRS to Cancel My Lien?<\/h2>\n\n\n\n
How Do I Get a Tax Lien Released? <\/h2>\n\n\n\n
What About My State Taxes? Can the State\nPlace a Tax Lien on My House?<\/h2>\n\n\n\n
Can Someone Help Me Fix My Tax\nProblems? <\/h2>\n\n\n\n