Today, Optima Tax Relief’s Lead Tax Attorney, Phil Hwang, discusses IRS enforcement, including the statute of limitations and how it might affect your credit report.
Did you know the IRS has a certain amount of time to collect your tax debt before it expires? How long? Well, the simple answer is 10 years, but several factors can pause this timeline. For example, filing for bankruptcy, living abroad, applying for an installment agreement, submitting an offer in compromise, applying for innocent spouse relief, applying for a taxpayer assistance order, requesting a collection due process hearing, serving in the military, or being sued by the IRS can all pause the 10-year collections period.
Many also wonder if IRS enforcement can affect your credit. The IRS can file a Notice of Federal Tax Lien, or a priority claim over all of your assets. While this notice does not show up on your credit report directly, it does become public information that creditors can access through supplemental reports. This can affect your access to credit, business opportunities, and even employment.
Join us next Friday as Phil will answer your questions about levies and wage garnishments!
If You Are Being Hit with IRS Enforcement, Contact Us Today for a Free Consultation
Welcome to our Ask Phil series, where each week our lead Tax Attorney, Philip Hwang will be answering your questions about various tax topics such as IRS enforcement, liens and levies, tax scams, and more. With Phil’s extensive background as a tax attorney, you won’t want to miss this valuable information!
Today, Phil discusses liens, including when to worry about them and how to get them removed.
What is a Tax Lien?
A lien is a legal claim against all of your property when you fail to pay a tax debt. A lien is private information only known to you and the IRS. That is until they file a Notice of Federal Tax Lien. This essentially means that the IRS alerts all creditors that they have the first claim over all of your assets, from property to vehicles to bank accounts. At this point, the federal tax lien becomes public information, meaning that anyone can find out about your tax debt. This can affect your access to credit, business opportunities, and even employment.
How to Get a Lien Removed
Once a federal tax lien is in place, the best way to get it removed is to pay your tax debt in full. Once the balance is paid in full, the IRS typically releases the lien within 30 days. However, sometimes other options may be available. For example, a process called lien subordination allows creditors to outrank the IRS. This basically makes it possible for you to refinance your home. It’s important to note that this does not remove the tax lien attached to your property. To find out if you’re eligible for lien subordination, you should file IRS Form 14134, Application for Certificate of Subordination of Federal Tax Lien, with the help of a knowledgeable tax professional.
Tune in next Friday as Phil covers the important topic of penalties and interest!
If the IRS Has a Lien on Your Property, Contact Us Today for a Free Consultation
