Deprecated: mysql_connect(): The mysql extension is deprecated and will be removed in the future: use mysqli or PDO instead in /home/a26f9f83/public_html/articles/includes/config.php on line 159
What is a Federal Tax Lien? > NetSparsh - Viral Content you Love & Share

What is a Federal Tax Lien?

A Federal Tax Lien (FTL) is a legal instrument that secures the claim of the United States in the right, title, and interest of a debtor taxpayer's assets. It is a public document and is recorded at the County Clerk's office or the Secretary of State, depending on local law. This is done to serve notice on all creditors or other interested parties of the government's claim.

The Federal Tax Lien is a negative item on the credit bureau report of the debtor. It may result in some creditors calling in their notes upon becoming aware of the FTL.

The FTL generally becomes the most senior claim against the debtor's assets with the exception of first mortgage holders who have properly filed financing documents. The Federal Tax Lien may also displace the primary security position of factoring firms lending on accounts receivable and bank revolving lines of credit 45 days after filing (each situation is unique and must be considered on individual circumstances). Certain claims may trump an FTL such as legitimate mechanic's liens, local taxes, and perfected landlord liens.

In some jurisdictions, local law provides for separate filing of liens for real property and personal property. In that case, the IRS will file two identical liens, one under personal property records and one under real property records. Failure to file both could result in the government's claim not being perfected on all assets. If the debtor is a corporation, failure to file at the Secretary of State may also result in an imperfect claim depending on local law.

The FTL is the basis for IRS legal authority to foreclose on debtor assets by conducting a seizure. Since the IRS Reform Act of 1998, seizures by IRS Revenue Officers have dropped dramatically. The lien is not to be confused with an IRS levy. The IRS can levy on a debtor taxpayer's bank accounts or wages without a FTL. IRS only needs a valid assessment and must have served legal notice in the form of a certified mail letter to the debtor's last known address 30 days prior to levy. However, often the IRS has filed an FTL before levy action even though it is not required.

If not filed, a FTL can be avoided by entering into an Installment Payment Agreement with IRS in most cases. Once filed; absent special circumstances, it is not released until the debt is satisfied. One may negotiate with IRS to subrogate the federal lien to another debt if it is in the mutual interest of the government and the debtor taxpayer. A lien may also be discharged from a specific property if IRS approves and gets proper financial consideration. Normally, only if the FTL is paid in full, the statute of limitations expires, or IRS agrees to an Offer-in-Compromise and is paid a settlement; will the FTL be released.

One can appeal the filing of a FTL but they must have a good case to overturn one. If you can show that the FTL will actually hurt the ability of the government to recover payment or that the tax assessment is incorrect, there is a chance of succeeding.

Hire a good Certified Public Accountant (CPA), Enrolled Agent (EA), or Tax Attorney if you need IRS help. If you cannot afford professional assistance, the IRS does have help in the form of the Taxpayer Advocate's Office. The help is hard to get because you have to go through some "red tape." But if you try hard, they might work with you.

James Robert Coleman, E.A., A.T.A.
Enrolled Agent & Accredited Tax Advisor
http://www.exirsman.com
Member: National Association of Enrolled Agents
Former IRS Revenue Officer, GS-11

In The News:

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news

Motley Fool

Taxes: 10 deductions we lost
WTOL
Come January, we'll all be trying to figure out the changes to the way we file our taxes because of the Tax Cuts and Jobs Act of 2017. So, with the help of a Richmond area financial adviser, we take a look at some of the biggest deductions we are ...
Here's How Much Losing 1 Big Tax Deduction Could Cost You ...Motley Fool
Tax Reform Is Done: Here's How It Matters to YouMotley Fool
6 States That Tax the Daylights Out of the RichMotley Fool
Motley Fool
all 19 news articles »

MarketWatch

Opinion: You can minimize the tax hit when you die — with a little planning
MarketWatch
There can be a lot of taxes upon one's passing, or very little, depending on the circumstances. Q.: My brother, my mother and I are trying to figure the best way for her to leave what she has in cash for us without it being taxed too heavily. We are ...

and more »

Sioux Falls tourism group faces $220K loss amid tax mix-up
News & Observer
The organization uses taxes collected on hotel stays to lure conventions, trade shows and tourists to the city through advertisements and marketing campaigns. The lodging taxes are sent to the state revenue office, which then funnels the money back to ...

and more »

The Patriot Ledger

Fall River Wonders: What are excise taxes all about?
The Patriot Ledger
FALL RIVER – Herald News reader Ronald Bernardo asks, “We pay excise taxes on our cars every year and I've always wondered where does the term excise come from?” The term “excise,” according to Merriam-Webster, means “a tax levied on certain ...

and more »

Minneapolis Star Tribune

Jeff Johnson promises tax cuts, but that means spending cuts, too
Minneapolis Star Tribune
Jeff Johnson is offering Minnesotans an ambitious plan to cut taxes and restrain spending, aiming to put the state on a starkly different path after eight years of a Democratic governor. “Our taxes are too high in Minnesota. We're in the top 10 of many ...


Tampa Bay Times

Andrew Gillum pays extra taxes on his Tallahassee home, records show
Tampa Bay Times
During his bid for governor, Democrat Andrew Gillum has reminded voters constantly that he isn't a millionaire like some of the other candidates who sought the office. But a review of property and tax records shows that Gillum is paying extra taxes ...
GUEST EDITORIAL: The downside to Florida's low taxesThe Northwest Florida Daily News
Florida Candidate for Governor Paying Extra Taxes on HomeU.S. News & World Report

all 74 news articles »

Forbes

Limits On Future Tax Hikes To Appear On Fall Ballot In Numerous States
Forbes
RALEIGH, N.C. — As voters head to the polls in this fall's midterm elections, they'll have the opportunity to approve ballot measures that would limit or thwart future efforts to raise taxes in states from coast to coast, including North Carolina ...

and more »

Times of San Diego

Opinion: California's Regulations and Taxes Can Stifle Family Businesses
Times of San Diego
Especially important for family businesses, the law also doubled the amount exempt from estate taxes. The 40 percent death tax is a major impediment to keeping businesses from one generation to the next, especially cash-poor and land-rich family farms.


Investor's Business Daily

No, Tax Cuts Are Not Driving Deficits — It's The Spending, Stupid
Investor's Business Daily
Earlier this week, Trump's top economic advisor, Larry Kudlow, gave a talk at the Economic Club of New York in which he said that tax cuts aren't to blame for deficits. "People are quick to blame deficits on tax cuts, but I don't buy that," he said ...


The Daily Progress

OPINION: A lesson on taxes and economic development
The Daily Progress
In April the Augusta County Board of Supervisors (BOS) offered a “work session budget.” It included the South River Supervisor's pet Capital Improvement Project entitled “Lyndhurst Sewer Project.” It was listed under “Economic Development” at a cost of ...

Google News

Uncle Sam is Ready...Are You? Organizing Tips for Tax Time

Anyone who is closely related to an accountant knows that... Read More

IRS Statute of Limitations: Do Taxes Ever Expire?

Many Americans believe that an IRS debt is a debt... Read More

To Tax or Not to Tax - This is the Question

To tax or not to tax - this question could... Read More

Understanding Basic Tax Terms

If your like many, you don't always understand what people... Read More

IRS Lock-In Letters ? What?s An Employer To Do?

Employers often ask employees to designate the amount of tax... Read More

IRS Certifies 2006 Toyota Hybrid for Clean Fuel Deduction

The Internal Revenue Service has certified the 2006 Toyota Highlander... Read More

Small Businesses: Company Car Vs. Personal Mileage Reimbursement In Hurricane Katrinas Wake

With gas prices at an all time high before Hurricane... Read More

Rental Property Tax Deductions

Own residential rental properties? This article discusses how income from... Read More

The Implications of Income Tax Charge on Estate Planning

OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon... Read More

How To Set Up A Tax-Saving Bookkeeping System

One of the most important, but least understood or appreciated... Read More

What You Need To Know About Taxes If You?re Getting Married

It may not be high on the list of wedding... Read More

Take Control of Your Taxes

As everyone in the U.S. knows, we have just passed... Read More

Income Tax Returns Your Accountant Should Not File

You've been feeling uneasy (perhaps even guilty) because you've failed... Read More

Get Uncle Sam To Pay $36,000 For Your Childs Education!

Let's assume that you would like to begin saving for... Read More

Small Business Tax Credit - Americans with Disabilities Act

Many small businesses complain when confronted with the expense of... Read More

How Likely Are You To Be Audited?

Statistics for IndividualsUnfortunately, the IRS increased its rate of auditing... Read More

Section 179 ? Tax Relief From Depreciation Rules

"Depreciation." For business owners, this word is the one most... Read More

Slash Tax when Buying a Business

When buying a business, how the "purchase price" is made... Read More

IRS Obtains More Than 100 Injunctions Against Tax Scheme Promoters

The IRS has obtained civil injunctions against more than 100... Read More

How to Check the Status of Your Tax Refund Online

So, you were pleasantly surprised to learn that you are... Read More

Early Distributions From Retirement Plans

An early distribution from an Individual Retirement Arrangement (IRA) or... Read More

Employment Taxes ? Depositing With The IRS

If your business has employees, you must pay employment taxes.... Read More

Highlights of IRS List of 2005 Tax Scams

Each year, the IRS lists various scams taxpayers get caught... Read More

Rearrange Your Affairs For Maximum Tax Savings

One way to maximize your business profits is by reducing... Read More

Tax Trap #5 -- Ignoring The IRS (and the 5 best ways to contact them!)

We all love to criticize the IRS, don't we? And... Read More