Episode 3: In this episode, Timalyn explains IRS tax liens and what you need to know to either avoid them or to get them removed. This is especially important if you are trying to sell a house with a tax lien. She'll do her best to help you to avoid last minute closing delays. This episode just might save the sale all together. What Is a Tax Lien?
A tax lien is when the IRS notifies all creditors that they have priority over any and all assets you have, due to a tax debt issue. Before this happens, the IRS will issue a Demand of Payment letter to you. It provides the amount owed and the payment deadline. You will typically receive 2-3 letters.
If you ignore the Demand of Payment letters, you'll receive a Notice of Intent to File a Lien, from the IRS. Once filed this lien will attach to any real and personal property you own (i.e. house, car, etc.). It's registered at your County Clerk's office, so all creditors know the IRS has a right to their share of the proceeds from any sale of personal property or real estate. In other words, the IRS is going to get paid first.
Did You Miss a Tax Filing Deadline?
If you did, you should listen to Episode 2 of Tax Relief with Timalyn Bowens. You may be able to avoid the tax lien and protect your credit.
A tax lien no longer goes on your credit report, but it can still affect your credit. For example, if you wanted to buy a house the tax lien will show up when the mortgage company runs its reports. This could keep you from securing the loan to purchase the house. A tax lien could also eliminate your leverage when you are trying to sell your house.
In Episode 4, Timalyn will explain exactly how to get a tax lien removed to enable you to buy or sell a house.
Who Gets a Tax Lien?
The Tax Lien is sent to your County Clerk, often because you owe at least $5,000 and have not responded to the previous letters.
There's another way you may incur a tax lien. Assume you owe a $50,000 or more in taxes and you negotiate a payment plan with the IRS. If you didn't put those payments on direct debit, but elected to pay by check each month, the IRS can attach a lien to protect its interest. This may prevent you from getting additional loans.
If you owe in excess of $50,000, Timalyn recommends paying the balance down to below the $50,000 and then setting up a payment plan using direct debit. This could help you to avoid the tax lien.
How Long Does a Tax Lien Stay on My Account?
There are many urban legends and misconceptions about how long the IRS has to collect on a tax debt. In reality, the IRS has 10 years from the date the tax was assessed. A tax lien will remain on your account for 10 years from the date the lien was issued. If the 10 years has passed, make sure other potential creditors know the lien has expired. Tax liens are "self-releasing." The tax lien certificate actually shows the release date.
Timalyn strongly recommends reviewing your tax transcript, if you have any tax issues. It's important that you understand what you are responsible for paying. She can help you to work through these tax debt issues. You may not have to pay as much as you think you owe.
Tips to Avoid a Tax Lien
Remember, Timalyn will explain the steps to remove a tax lien to sell or purchase a home in Episode 4.
As we conclude Episode 3, we'd like to encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Apple Podcasts, Google Podcasts, Spotify, and many other podcast platforms.
Remember, Timalyn Bowens is America's Favorite EA. She's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.
For more information visit: https://www.americasfavoriteea.com/. If you have any feedback, or suggestions for an upcoming episode topic, please submit it here: https://www.americasfavoriteea.com/contact
Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.
