Posted On November 22, 2013

Professional assistance may be needed to lift tax liens

Although it’s criminal to intentionally avoid filing an income tax return in order to evade the payment of taxes, many people who cannot afford their tax bill go ahead and file an accurate return but simply don’t enclose a payment with the return. This will be followed by IRS collection activity. The IRS has two fairly drastic measures in Nevada and other states to collect from those who owe back taxes. They are the filing of tax liens and the use of the IRS tax levy.

However, the IRS first complies with certain due process procedures before filing against or seizing an individual’s financial accounts or assets. The agency sends a series of letters1 to give the taxpayer notice of the amount due and the deadlines for making payment. If there is no response, the IRS may go ahead and levy on the person’s bank accounts or other funds or assets.

Levying an account will automatically tie up and freeze the account until released by the IRS. The balance in the account will also be turned over to the IRS. In order to be relieved from the levy, the taxpayer must resolve the situation with the IRS by agreement.

The IRS may also file a federal tax lien in the local court house to insure its position with respect to real estate owned by the taxpayer. The tax lien tells the world that the IRS has a lien on the person’s real estate or other property. The owner will find it impossible to dispose of the property without first taking care of the problem. The best way to avoid that outcome is to do some hard negotiating with the IRS and enter into a repayment program with the agency.

In some instances, the agency may agree to compromise on the amount claimed due. In Nevada and elsewhere, that strategy may require the assistance of professional tax counsel. Sometimes it may be that an experienced tax practitioner can obtain a better agreement by virtue of having an ongoing relationship with agency personnel and a greater familiarity with agency practices. It’s always helpful for a person with tax liens and ongoing collection activities to get a consultation with a tax professional to see what options may be available.

Source: Huffington Post, IRS Collection Activity and Levies Can Be Avoided, Steve Rhode, Nov. 14, 2013