IRS Tax Problems
Do You Have Something in Common with Iggy Azalea?
The 25-year old rapper originally hails from Australia, but moved to the United States ten years ago to pursue a hip-hop career, and she has been exceedingly successful. In addition to having achieved fame and stardom, she has the dubious distinction of having a run-in with the Internal Revenue Service, an experience that tens of thousands of U.S. taxpayers can empathize with her on.
One thing that may set her apart, however, is the dollar figure at issue: Azalea faces a tax lien from the 2014 tax year that totals $391, 056.55 Azalea was none too happy about the debt to the government being made public, and made a number of derogatory and defensive statements through the social media site Twitter. Among other things that she said was, "The IRS gave the option to pay them monthly or lump sum. I picked monthly, who wouldn't?" She also indicated that "They exaggerate everything."
Are You Facing a Tax Lien Too?
Whether you owe tens of thousands of dollars or hundreds of thousands like Azalea, when the IRS issues a lien against those who owe money, it does so in order to make sure that the agency will end up receiving the money that is owed to it. A lien creates an automated payment of back taxes, and as a result it can put a stop to the ability to purchase or sell real estate, can negatively impact a taxpayer's credit scores, and can have a number of other negative impacts that are long-lasting: In some cases, the liens can be in place for a decade. Until payment is completed, the lien will remain in place.
As was true with Azalea, liens become public as soon as they are filed. The amount that is owed is available to anybody seeking the information, including credit reporting bureaus, which means that government liens will quickly impact a taxpayer's credit score.
Though the phrase "lien" and "levy" are often thought to mean the same thing, there are important differences: A lien filed by the Internal Revenue Service specifically sets out to enable the agency to collect money that is owed to them by a taxpayer, while a levy forces the issue by initiating action to remove money directly from a taxpayer's paycheck or bank account.
Tax Lien Removal
There are several different ways that you can have a federal tax lien against you eliminated.
Paying off the tax debt in full
The expiration of the lien due to the ten-year statute of limitations on tax liens
Proving that the lien was filed by mistake
Successfully establishing an offer in compromise
What to do If You Are Served with a Tax Lien
Tax liens are filed against individuals who have not taken preventive actions or appropriate steps to prevent them. There are a number of options available to those who owe the government money, and some can actually prevent the filing of a lien.
The best way to do this is to work towards a streamlined installment agreement by paying off enough of the outstanding balance to bring it down to under the $25,000. Failing that there is the chance that you might qualify for the IRS fresh start program, or can move some of your tax debt into either a home equity loan or onto a credit card. The goal in each of these instances is to preempt having a lien filed by bringing your outstanding amount to under $25,000.
Failing this, once a lien has been filed there are not many actions that can be taken short of paying the balance in full or attempting to get into the fresh start program by bringing your balance below $25,000 and arranging to pay off the balance in monthly installments.
What to Do If You Are Faced with a Tax Lien?
A tax lien is not something that you want to handle on your own. If you are anticipating having a tax lien filed against you or want to avoid that eventuality, it is in your best interest to seek professional guidance and representation by a tax professional.
William Ray is a specialist in IRS tax resolution problems. His firm, NationStar Tax Advisors, LLC is based in Orlando, FL, but services clients throughout the U.S. NationStar specializes in Wage Garnishment,Bank Levy, IRS Audit Notification, Payroll Tax Relief, and State Tax Problems.
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