When it comes to understanding tax machinery, a term often encountered, but barely explained, is tax lien. A government’s legal claim against the assets owned by a tax-non-compliant individual or a business, a tax lien chiefly surfaces when tax obligations aren’t duly observed, and payments remain unsettled despite notices from the tax authority.
What Triggers a Tax Lien?
So, what precisely sets off a tax lien? Gone unpaid, federal or state taxes, typically culminate in a tax lien. A taxpayer, after receiving a notice specifying the amount due and not making any effort to respond or delay the payment, unwittingly sows the seed for the government to lay the tax lien against the person’s assets.
Traveling across the boundaries of properties, securities, and vehicles to debts associated with a business – a tax lien extends its reach to all these and more.
Exploring the Aftermath of a Tax Lien
What does a tax lien entail? It guarantees the government gets first dibs over any creditors making a play for the debtor’s assets. Here’s where things get serious. Although a lien doesn’t immediately translate into the sale of properties, ignoring it can invite a consequence none too pleasant. A tax levy may be subsequently rolled out, ending up seizing the assets if the tax debt is not paid off. Eventually, the government sells these confiscated assets.
The ripple effects of a tax lien can’t be ignored. Even while credit reports have ceased to include them since 2018, their existence as a public record is a hard fact. A tax lien existing against your name can narrow down your chances of securing credit. Consequently, selling or refinancing properties might morph into Herculean tasks since the tax authority holds the primary claim.
Redressing the Tax Lien: The Path Ahead
If there’s a problem, the solution isn’t far behind. A tax lien may seem daunting, but there are ways to address it effectively. It can be rectified if the taxpayer agrees to a payment plan or performs corrective action that aligns with the government’s agreement. Full payment of the debt is the least complicated route, but the feasibility of this option varies on a case-to-case basis. In instances where making the entire payment isn’t feasible, the government generally comes to the rescue, agreeing to a monthly automatic withdrawal plan until the outstanding debt is paid in full.
There’s no denying that complicated situations might call for professional help, and that’s where tax relief service companies like Creative Tax Solutions come in. We’re committed to providing top-of-the-line accounting, tax, and advisory services. Such professional services can be a boon to taxpayers grappling with tax lien issues.
Managed by a team of proficient personnel, including Thomas Patti, Marla Klein, Adam Hastie, and Don Murry, Creative Tax Solutions has a track record of successfully destressing over 20,000 clients from their tax debts. Championing experienced advice, affordable payment solutions, and obligation-free consultations, this team can guide you deftly through the tax lien process.
In summation, a tax lien might temporarily disrupt your financial stability, but remember—understanding its implications, taking timely action, and seeking professional advice can make the journey less overwhelming.