This article by Richard Haslow lays out a step-by-step process tax payers can utilize themselves to get rid of IRS liens once and for all. While we encourage tax payers facing IRS liens to be proactive through out the process, we continue to believe the safest approach is to use a tax representation firm that has years of experience dealing with such issues.
The IRS filed nearly 700,000 federal tax liens in 2007, according to JK Harris and Company, a national tax consulting firm. Tax liens are a seizure of personal property against individuals who do not pay taxes within a specified time. The IRS will only release the lien 30 days after full payment, if paid in cash or with a cash bond. Tax liens become public information and are reported by credit reporting agencies, seriously affecting the taxpayer’s credit score.
1. Seek professional advice. Avantri Law, a Seattle-based firm specializing in tax law, says clients should have a proactive approach by contacting a specialist before the lien is filed. The IRS notifies at-risk tax payers prior to issuing a Notice of Federal Tax Lien. Don’t assume sending a partial payment will keep them at bay. Avantri Law says that even if a partial payment covers most of the tax debt, the lien amount stays the same until the entire debt is paid in full.
2. Pick up the phone and call the IRS. Frederick W. Daily, author of the book “Stand Up to the IRS,” says that calling the telephone number listed on the letter is the best way to deal with a tax lien threat. Daily says that telling the IRS a tax lien will cause serious personal financial obstacles may reduce the changes of the lien being activated or at least influence some sympathy on the other end of the phone.
3. Appeal the tax lien notice. If the phone call didn’t go well the IRS will acknowledge a motion to appeal by filing with the IRS Appeals Office. Request a conference call with the manager of the unit filing the lien. If that request is denied, fax or mail Form 9423, a Collection Appeal Request, to the office managing the lien. A decision will be made within five days. However, Daily says that most taxpayers unfortunately lose out with this strategy.
4. Pay in full or request a partial discharge. If there is not enough cash on hand to pay in full or friends and family have balked at loaning you money, Daily says in his book that requesting a partial discharge may be option. A partial discharge, according to the Taxpayers Clinic, is the process a taxpayer goes through to offset a tax lien by selling property for cash. The proceeds from the sale are sent directly to the IRS.
5. Get a Certificate of Release of Lien. This document is issued within 30 days after the taxes are paid in full or when discharged through bankruptcy proceedings. The IRS will also issue the certificate after the statute of limitations has run out, usually 10 years after the lien was filed. If a Certificate of Release of Lien has not been received after 30 days, Daily says the taxpayer should call the IRS Centralized Lien Processing Department to investigate.
Posted by JK Harris & Company