You go to the ATM but can’t get any money out. Your payroll manager calls and says your paycheck has been levied. What do you do next?
Here’s 6 ways to Release or Remove an IRS or State Tax Lien:
- Obtain a Properly Structured Monthly Payment Plan. You don’t have to ‘full pay’ your tax debt. Usually the tax collector will accept a payment plan. But too often troubled taxpayers make payment arrangements they can’t afford. It’s crucial you obtain a properly structured plan that will satisfy the tax agency without adversely impacting your family’s well-being. This requires a working knowledge of local and national collection standards.
- File for an Offer in Compromise. It really is possible to Settle with the IRS or the state for Less than you Owe, if you can document with the collectors that your reasonable collection potential is not sufficient to clear the debt. It can be a complex process, and take up to 12 months to complete, but a successful offer will permanently put your IRS problem behind you.
- Appeal the Lien Filed. There are times when a lien is filed in error. Perhaps you paid your bill late, but the tax agency personnel neglected to update your account record. Under the Taxpayers BIll of rights, you are entitled to a Certificate of Release when this happens. Deliver photocopies of this document to the three credit bureaus to minimize damage to your credit rating.
- Gain Currently Non-Collectible (CNC) Status. This IRS status is granted to taxpayers who are experiencing financial hardship, and puts collection activity on “hold”. Assuming you have filed all your tax returns, you’ll be required to submit a complete record of your financial assets, and provethat your income and expenses comply to local and national collection standards in order to document your inability to pay your back taxes. Once obtained, CNC status generally lasts 2 years, after which time you can re-apply by submitted updated financial information.
- Do Nothing. Try to live with the fact that the IRS will have 10 years from the date the tax is assessed to continue collection activity, freeze your bank accounts, garnish your pay, and seize property. This is normally not a good option.
- Get Professional Representation. Dealing with IRS collections and appeals processes is a very specialized area of practice, and one in which most taxpayers, lawyers, and accountants lack the expertise and experience to deal with successfully. That’s why the US Treasury has enrolled certain professionals, designated as Enrolled Agents, who specialize in dealing with IRS problem resolution. They know what to do and how to do it when it comes to removing a tax lien or releasing a tax levy.
ANCHOR ON THIS: Tax liens and levies are actions of last resort for federal and state tax collectors. You’ll generally have received multiple assessment letters and notices of intent to levy before your bank account or paycheck is hit. The bad news is that your own procrastination helped get you here. Tax problems can indeed be overwhelming. There’s good news however. It really is possible to get a fresh start, and the steps to resolving your tax matter are usually easier than you feared. Now it’s time to make a quality decision, decide you’re going to put your IRS problem behind you, and take that first step.