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What to know about federal tax liens

| Jun 17, 2020 | Corporate & Business Tax |

Georgia residents and others who owe money to the IRS may be subject to a tax lien. Liens can be attached to any type of property that you have such as a home, car or bank account. While a lien can have an impact on your ability to obtain credit or to refinance a loan, you generally retain ownership of your assets.

Why the IRS might put a lien on your property

The IRS will typically only put a lien on business or personal assets if you willfully refuse or neglect to pay a tax debt in a timely manner. Generally speaking, you will receive several notices about the outstanding debt owed before the government will seek a lien. Furthermore, you may be able to avoid a lien by entering into an installment agreement to pay what you owe over a period of several months or years.

How to remove a tax lien

A tax lien can be removed by paying what you owe as quickly as possible. In most cases, the lien will be rescinded no more than 30 days after the balance is paid off in full. Alternatively, it may be possible to have a lien withdrawn by reducing your balance to $25,000 or less.

Liens generally don’t go away in bankruptcy

If you file for bankruptcy, there is a good chance that a lien will remain if you still owe more than $25,000 in back taxes. However, it is possible that the government will forgive some or all of an outstanding tax balance if you show that you don’t have the means to repay it.

If you owe back taxes, it may be a good idea to speak with a tax attorney. An attorney may help you avoid federal tax liens or other negative consequences that could arise if you don’t pay what you owe in a timely manner. Legal counsel may also help to reduce what you owe by having fees, penalties and interest reduced or waived entirely.

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