How Does a Notice of Federal Tax Lien Work?
A federal tax lien notice is filed in order to give the government first priority against any other creditors or purchasers of your property. It may be filed only after:
- The IRS assesses your tax liability
- The IRS sends you a Notice and Demand for Payment, which is a bill telling you how much you owe in taxes
- You neglect or refuse to fully pay the tax debt owed within 10 days after notification.
Once these requirements are met, the IRS can file a lien for the amount of your back tax debt, called a Notice of Filing of Tax Lien (NFTL). By filing this public notice of the lien, your other creditors are informed that the IRS has a claim against all your property for the amount of the unpaid debt. This may include any property you acquired after the lien was filed. The tax lien may attach to all your property, including your house or car, and to all your rights to property, such as your accounts receivable if you are a business.
You Have the Right to a Collection Due Process (CDP) Hearing
When the IRS is trying to collect your tax debt, they will send you important notices detailing your right to a Collection Due Process hearing. Don’t ignore these communications. The CDP hearing can allow you to discuss the amount owed with tax authorities and dispute it if you believe it is not correct.
Once you file a Collection Due Process Request, the IRS will schedule a hearing with an appeals officer. The collection appeals officer will review the case and submit a written document summarizing his or her conclusions, including proposals for less aggressive collection alternatives.
New York Tax Lien Lawyer Explains Collection Alternatives
The IRS (and New York State tax authorities) may allow alternative methods of collecting debt for taxpayers who qualify. These include tax installment agreements, in which payments are made over time, and offer-in-compromise agreements, in which taxpayers may be able to negotiate to pay less than the amount owed to settle their tax debt. Another potential alternative is to apply for currently-not-collectible status. If the IRS places you in this status, it is because they believe you currently cannot pay your taxes due to financial hardship. However, you will need to prove financial hardship to the IRS; and if your financial situation changes for the better, the IRS may pursue payment. You may be able to pursue these options even if the lien or levy process has started.
Avoid a lien or levy by proactively making other payment arrangements with the IRS. As soon as you know you cannot pay your taxes in full, call tax lien lawyer Timothy S. Hart at our Albany office at (518) 213-3445 or New York location at (917) 382-5142 to negotiate a payment or settlement option.
Understanding IRS Tax Levies
A tax levy is different than a tax lien. While a tax lien is used to make a claim against property as a security interest, an IRS levy is an actual seizure of the property to pay the tax debt owed. Types of property the IRS or NYS may levy include:
- Cars, boats or even houses in some cases
- Wages, retirement accounts, dividends, bank accounts, rental income, accounts receivable from a business, the cash loan value of your life insurance, and commissions.
The IRS usually levies only after these three requirements are satisfied:
- A tax was assessed, and you received a notice demanding payment
- You did not pay the assessed tax
- The IRS filed a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing,” which is a levy notice, 30 days prior to the levy. This can be given in person or mailed to your place of residence or place of employment.
The IRS can commence a levy for several reasons, such as unfiled tax returns, unpaid back taxes or if you defaulted on an installment agreement.
NYS Tax Levy Lawyer Advocates for Taxpayer Rights
If your property is levied and sold or if the IRS gets funds from your bank account to pay your tax liabilities, it will be unlikely that you will be reimbursed. If you are being threatened with a levy, acting immediately by doing the following may help you avoid having your property and/or money taken:
- Verify the levy. There is always room for the IRS to make mistakes. Upon receipt of the initial IRS levy notice, you should consult an IRS representative to verify the details of your tax liabilities and find out if they are accurate. Our tax levy lawyer is also a certified public accountant who can assist you with this step.
- Set up a hearing. You have a right to a fair hearing to discuss your situation before a bank levy or asset seizure is enforced. File Form 12153 with the IRS to request a hearing where you can show evidence that the assessment of your tax liabilities is in error.
- Seek the help of an IRS tax levy attorney. You can represent yourself in the hearing or you can hire a tax levy lawyer. When you know you have an incoming tax levy, you will give yourself a much better chance of a satisfactory outcome with the help of a tax attorney.
- Negotiate a payment method. You may be able to avoid a levy by negotiating with the IRS. If the IRS sees you are making a good faith effort to pay your tax debts, a repayment method may be approved that can fit your financial capabilities.
When you work with tax levy lawyer Timothy S. Hart, one of the first things he will seek to do is get a postponement of the levy so he can fully review your tax situation. Once we understand your situation, our attorney can recommend solutions that may be viable for satisfying your tax debt. Call our responsive law firm today at our Albany office at (518) 213-3445 or New York location at (917) 382-5142 to arrange a free consultation.
NYS Tax Attorney Answers Lien and Levy FAQs
Many people commonly confuse liens and levies, but they are not the same thing. A lien is similar to a mortgage in that it secures a claim against your property. It does not take property or assets. A levy actually takes property and assets. Generally, liens come before levies are issued, but in the case of bank accounts and wages, this is not always true. Sometimes these can be levied without a lien.
Following are answers to common concerns about liens and levies, including how to get them removed.
Yes, a tax lien is a bad thing. A tax lien is put in place to help ensure that the IRS can collect your tax debt. It gives them first claim to your property over other creditors. Should you not pay the taxes you owe or make debt settlement arrangements with the IRS, your home or other property that has a lien on it may be levied. A levy is when the IRS seizes your property. State governments, including New York State, can also file tax liens for nonpayment of taxes. People with seriously delinquent tax debt who have had federal liens filed and levies issued may have their passports revoked or denied.
The consequences of a tax lien are serious. A tax lien can be attached to almost all property, such as real estate, personal property, cash, stocks, vehicles and even future acquired assets. It can affect your ability to sell your home or other property. If you file for bankruptcy, the tax lien will often continue and be a valid issue that is not extinguished in the bankruptcy.
In the past, tax liens were also reported on consumer credit reports, which could negatively impact credit scores. This changed in 2017 with an agreement between consumer credit reporting bureaus to remove tax liens from reports. However, businesses with tax liens against property and assets may still have negative consequences to their credit scores.
How long the IRS can have a lien on you depends upon the circumstances. If you pay off your taxes, the lien will be removed within 30 days of payment. If the IRS accepts an installment repayment plan, it may remove the lien within 30 days. If you don’t pay your debt, the general statute of limitations on IRS collections is 10 years.
There are limited methods to get an IRS tax lien removed if you cannot pay your debt in full. If the tax amount you owe can be reduced to below $25,000, and a direct debit payment plan has been established, the IRS will typically agree to remove the notice filing within 30 days, as long as all your tax returns are filed. Other methods that may enable you to get the tax lien removed include an offer in compromise if accepted by the IRS. Our attorney will explain possible options for getting a tax lien removed when he learns about your situation.
A tax lien withdrawal can happen after the tax lien has been released. A withdrawal is where the IRS agrees to remove the tax lien notice filing from the public records.
What happens when you get a tax levy is the IRS can take hold of your personal or business properties and sell them through auction to pay for your tax debt. When the IRS sends a notice for a bank levy, your bank will freeze your financial resources and send the money directly to the IRS. With a wage levy, your employer will send the IRS part of your wages each pay period.
If there is an IRS tax levy on your bank account or wages, it may be appealed if it is causing economic hardship. Employers generally have one full pay period cycle after receiving the Notice of Levy on Wages, Salary and Other Income before they are required to send funds to the IRS, thus allowing some time to correct the problem. Even if you are being levied, you may still have options. Contact NYS tax levy lawyer Timothy S. Hart to learn about a possible payment plan or settlement.
How do I clear my tax levy? That is an important question to ask, because a tax levy can have disastrous personal and financial consequences. While it is not easy to get the IRS to release a levy, it can be done. If a levy involves a bank account or wage levy you will have to either:
- Pay the tax debt owed in full
- Enter into an installment agreement
- Prove the levy is on a tax debt that is outside the statute of limitations
- Prove the levy will create or is creating an economic hardship.
Every tax debt situation is different. Our tax levy lawyer can advise you about having a levy released based on your unique circumstances.
Why Choose NYS Property Tax Lien Attorney Timothy S. Hart?
New York attorney Timothy S. Hart has extensive background resolving the most complex IRS tax problems for clients. He is admitted to practice in the U.S. Tax Court and focuses his work exclusively in helping taxpayers achieve solutions to tax issues with the IRS and state tax authorities. Additionally, our tax attorney is also a Certified Public Accountant. When your property and assets are in danger of being seized, choose a tax lawyer who knows how to stand up to the IRS and get beneficial results.
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NYS Tax Levy Lawyer Pursues Debt Solutions for Taxpayers
Sometimes taxpayers who are in default do not understand the full authority the IRS has to pursue delinquent taxes. They don’t realize that their property and assets can be seized for non-payment. Our NYS tax levy lawyer does not want your property to be taken, which is why he will negotiate assertively with the IRS to try and get you a debt payoff arrangement or settlement you can afford and that will remove liens and levies against you.
Attorney Timothy S. Hart may be able to help you by:
- Negotiating installment payments. With installment payments, you pay the full amount you owe, but payments are made over time.
- Securing an Offer in Compromise. With the help of a tax attorney, you may be able to get an offer in compromise that allows you to pay a lesser tax amount than you originally owed. This may be a compromise, but it is a win-win situation because the IRS will receive back the original amount owed and they will get a guarantee that you will be paying your taxes faithfully.
- Proving your financial hardship. The IRS can understand extreme economic difficulty. If you can prove your case to the IRS that levying your bank account will only cause more financial burden, then you may become eligible for Currently Not Collectible status.
Tax levies and liens can ruin you financially, as well as cause severe stress and embarrassment. Experienced NYS tax levy lawyer Timothy S. Hart will pursue a resolution with the IRS for your tax debt problem.
Don’t Ignore the IRS When You Owe Them Money
Let Our New York Tax Lien Lawyer Negotiate a Solution
It’s understandable why so many people who owe back taxes do their best to avoid contact with the IRS. They may be at a loss as to what to say to these tax authorities and be frightened about what their financial future holds. However, the IRS is not going to forget about your tax debt. Not responding to their attempts to communicate may paint an unfavorable picture of you. The IRS may believe you are simply trying to avoid paying the taxes you owe. If you ignore them and your tax debt remains outstanding, you risk being regarded as a tax evader and having your assets seized.
You do not want to get into this kind of situation. With the help of our knowledgeable NYS tax levy lawyer, you can achieve a better solution that will get the IRS off your back. Reach out today.
Timothy S. Hart Resolves IRS Tax Lien and Levy Issues Nationwide
IRS tax levy attorney Timothy S. Hart is licensed to handle federal tax concerns in all 50 states. He can also help you pay your state taxes or deal with New York State tax warrants and levies. Call our Albany office at (518) 213-3445 or New York location at (917) 382-5142 or use our online contact form to arrange a free consultation with a skilled tax lien and levy lawyer.
Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ 
