Before I answer that, let’s make sure that we are talking about a lien as opposed to a levy. Many people get those two terms mixed up. A levy is an active collection tool of the IRS where they take money out of your bank account or take part of your paycheck. A lien on the other hand is a document that is recorded at the courthouse which says that when you sell a piece of property or other type of asset, the IRS is entitled to the money which you would get instead of you getting it. So if you don’t sell anything, the lien is not really going to do anything to you. However, how can you possibly get a lien released? The standard answer is you have to pay all the debt and then it will be released within 30 days but if you owe under $25,000, part of the fresh start program says that the IRS will almost always release or withdraw a lien that has been filed against you.
The other way to get a lien released is if you can show the IRS that it will aid them in collecting the debt. A prime example of that is getting a refinance for your house. A mortgage company will not refinance your house if there is a mortgage lien that is filed before their new mortgage but there is a process you go through with the IRS where they will agree to release or subordinate their lien to the new mortgage so that you can get that refinanced and pay down what you owe to the IRS.
Should I File My Tax Return Even If I Cannot Pay It?
By all means, you should and here is why. Even if you can’t pay what you owe, if you file your returns, you will save on a lot of penalties that otherwise would be charged against you. When you file your return even a month later than it should have been, the IRS will start charging penalties for late filing and non-filing. These penalties can add up to at least 25% of your total tax. So it is very important to file that return every year or at least file an extension because the extension does put off the time that you have to file until October 15th, however, it does not extend the time you have to pay.
Can Bankruptcy Relieve My Tax Debt Problems?
Bankruptcy is a very detailed subject and you need to see an attorney who specializes in bankruptcy. In general I can tell you that some taxes are dischargeable in bankruptcies, others are not. Payroll taxes are never dischargeable in bankruptcy. For personal income taxes, the general rule is that the tax has to be more than 3 years old. There are other rules that go along with that but that is the primary rule and if your tax is over 3 years old and meets several other criteria then they can be discharged in a Chapter 7 bankruptcy. Of course, a Chapter 13 bankruptcy is meant to repay the debt along with the other types of debt you have over several years. So it can be used in certain circumstances and not in others.
What Is An Expedited Installment Agreement?
An expedited installment agreement is a new vehicle for the IRS and it is designed for taxpayers who owe between $50,000 and $100,000 in unpaid taxes. If you take advantage of an expedited installment agreement, you must be able to pay the total amount you owe within 72 months or within however many months it takes to pay the debt in full. In other words, if the statute of limitations will run in 60 months for your particular tax liability then you must pay it off within 60 months. So, if you can do that then you will not have to submit financial information and many people do not want to submit financial information to the IRS. This is because if you have an asset that has a lot of equity then the IRS is going to want you to sell or encumber that asset and pay the debt down as far as possible with one lump sum. So the expedited installment agreement has a real place in our arsenal of help by letting the taxpayer pay the debt in his own time with his own payments without having to submit financial information to the IRS.
How Can I Get My Tax Levy Released?
One of the greatest fears of clients when they come to retain our services is what they can possibly do if the IRS has currently put a freeze on their bank account or is actually having their employer withhold money from their paychecks. These are known as levies and they can be dealt with as long as we can respond in a timely manner. The first thing rule for having a levy released is that the taxpayer needs to be fully compliant with the IRS. It means that they need to have all of their tax returns filed. If they are expected to make quarterly estimated tax payments, they need to continue to do that. If they are in a current installment agreement or trying to enter into an installment agreement, they need to have that set up and to be able to make their monthly payments.
Essentially you are walking a fine line that the IRS wants you to walk as a good current and compliant taxpayer. Once those criteria have been met then we can file to have the levy released with the IRS on your behalf.
For more information on Getting Tax Liens Released, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (864) 271-7940 today.