State Tax Liens – IRS Tax Liens

Take your time!State and Federal Tax Liens can make your life miserable! When you are behind in paying your taxes, the state and the IRS both have the power and the option to file a lien against your assets: personal property and/or real estate. The easiest and most effective lien for the government to use, is, of course, against your home — if you have one. A property lien recorded against your home gives the IRS the legal right to collect taxes from the sale of your home, though, frankly they rarely go that far.

The government is patient. Why? – They are not much different than a loan shark! Once your property is locked-in with a tax lien, the fines, fees, and astonishing interest that accumulates EACH and EVERY month adds up to SERIOUS EXTRA MONEY!


Why Lien Your Home?

The purpose of the lien against your home – is so the government tax authorities can secure their interest in your real property should you attempt to refinance it (pull out cash without first paying off the State or IRS), or selling the home (without paying off the IRS or State). If you need to refinance to pay the State or IRS, they’ll allow that. It is in their best interest. If you need to sell your home, you can negotiate an agreement to sell your home so long as then get some or all of the taxes you owe. The IRS and the State of California will work with you if you approach them with everyone’s interest in mind.

The Government Can Lien Anything

tax problemA State or IRS lien can filed be against you, your spouse, or your business. A lien against your business could end up seizing your any or all of your accounts receivables leaving you in a financial pickle. At this point everything you own is just one short step away from becoming the property of the State of California or the United States Government. That’s really, really bad. Why? Because there are some people at the State and IRS who are all about “closing cases” to make sure their job performance is appreciated by their “higher ups.” If you have a tax lien you should work at getting it removed.


Tax Liens Affect Your Credit Rating

State or IRS Tax Liens filed against you will eventually show up on your credit report and that will negatively affect your credit score and more. More? For instance, banks will be nervous to open checking or savings accounts for you as if you are toxic. The banks assume that tax liens will soon turn to bank levies. Bank levies are costly for the bank to accommodate. It’s all about dollars and cents for the bank to accept your new account. Much easier and lest costly to refuse your for “policy reasons.”

Upshot – The banks don’t want the extra work and associated costs when the State or IRS comes in to take your money.

A State or IRS lien on your tax report may means you won’t even qualify for a reasonable automobile loan as the same thing could happen to the vehicle if you have any equity invested. The list of of problems that a tax lien will cause you is endless.

If you immersed the collection process with the State or IRS —even if your submit to the State or the IRS an Installment Payment Agreement and it is accepted— the State or IRS may decide to file a Notice of State/Federal Tax Lien ANYWAY – just to be certain to secure the government’s interest in your home or personal property. Filing a tax lien usually has to do with the size of the debt that you owe. The IRS recently raised the minimum debt amount for tax liens to $10,000. That does not mean the IRS WILL file a lien if you owe $15,000, it is just a minimum threshold that is interesting to mentally make note. A State or Federal Tax lien establishes priority as a creditor in competition with other creditors in certain situations, such as your selling a home or other real estate; and in bankruptcy proceedings. Once a tax lien is filed, it may — at some point — me noticed and then appear on your credit report. Therefore, it is important that a you begin working to resolve your tax debt as quickly as possible, before a tax lien filing becomes necessary.

An IRS or State of California tax lien acts like an insurance policy to ensure your tax liability is not overlooked.


You Need to Make Contact – Make an Attempt to Stop Lien Filing

If you have unpaid, delinquent taxes and you have not yet reached out and made a “documentable effort” to resolve your tax debt or set-up an installment payment plan, then the IRS, for one, will send a series of computer-generated tax liability assessment letters, which will list your unpaid taxes, penalties and interest charges. Eventually, you will reach the end of the letter campaign and the final letter(s) will advise you and warn you that a tax lien is about to be filed and the IRS is also “intending to levy.” This letter is your final notice. It is the IRS’s way of saying: “We have tried unsuccessfully to collect your tax debt so our next step is to file a tax lien and IF THAT doesn’t get your attention to continue forward with an actual levy.”

Take Tax Lien Threats Seriously

If you finally decide to take those last lien-threat letters seriously, and you act before the threat of a lien actually becomes a lien, you as a taxpayer can possibly avoid the all the bad consequences of having a lien recorded against you and your assets. If you act quickly, you may even qualify for a penalty abatement, which can reduce the total amount you owe by as much as 50%.


Palovik Financial Services

Eugene Palovik
Palovik Financial Services
P.O. BOX 206
Buena Park, CA 90621

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