Tax Tips: Pasadena Tax Attorney & Cpa – Irs Tax Lien

An IRS tax lien is a legal claim against assets of a taxpayer who owes back taxes. If the taxpayer doesn’t discharge the tax lien by paying the overdue taxes, then assets can be seized and sold with the proceeds going to the tax debt balance.

Both the IRS and the Franchise Tax Board can place liens on a taxpayer’s assets. They use this as a collection tactic which is very severe. Valuable assets, such as real estate, could be sold at a forced sale (fire sale) resulting in minimal proceeds to apply to the tax debt.

A federal tax lien may be issued with regard to any federal tax including income tax, gift tax and estate tax.

The tax law is very specific granting significant powers to the IRS. Section 6321 LIEN FOR TAXES provides:

“If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belong to such person.”

The lien acts like a mortgage on the assets of the taxpayer and remains in force until the full tax liability is discharged or otherwise resolved. For example a building or equipment with a lien could not be sold until the tax liability has been paid and the lien lifted.

There is a statute of limitations—the lien generally becomes unenforceable ten years after the date of assessment.

A taxpayer should take immediate action if they receive any notice regarding unpaid taxes—especially a Notice of Federal Tax Lien (NFTL). There are many options that a tax attorney can counsel a taxpayer on regarding getting the lien removed. An IRS tax lien arising as described here is valid against the taxpayer without any further action by the government. The IRS will firstly look for assets that can be converted to cash as quickly as possible. They are not in the real estate business or the used car resale business. The IRS or Franchise Tax Board will firstly track down your bank accounts and grab as much as they can.

Once the outstanding tax owing has been resolved a Certificate of Release of
1000
Federal Tax Lien should be obtained. This is generally issued within 30 days of retirement of the tax debt.

Federal tax liens and administrative levies are similar but not the same. A levy is an administrative action by the IRS without the necessity of going to court. In short, the IRS requires no court permission to issue and enforce a levy. The levy is giving a taxpayer notice that the IRS intends to seize assets.

Whether it is a lien or a levy the end result is the same—the IRS is going to grab the taxpayer’s assets. As soon as a notice is received, a taxpayer is strongly encouraged to retain counsel to avoid asset seizure and forced sale. There are remedies including offer in compromise that can be utilized to resolve the matter.

John Spurgeon is a tax attorney in Pasadena, California servicing clients in the greater Los Angeles area. John Spurgeon & Associates, who are both tax attorneys and CPAs, have the proven knowledge and experience to effectively deal with IRS tax liens or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.

About John Spurgeon & Associates

John Spurgeon & Associates is a professional services firm located in Pasadena, California with a focus on tax law and related accounting services. They have extensive experience with federal and state income taxes, payroll taxes and sales taxes. They represent business, non-profits and individuals against the IRS and the Franchise Tax Board (California State Taxes). As both tax attorneys and Certified Public Accountants they offer a broad range of tax related services.

By: Don K

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John Spurgeon is a native and resident of Pasadena, California. He is a father of eight and a grandfather of seven. He has over 25 years of experience dealing with corporate income tax, individual income tax, tax planning, litigation of civil criminal cases and tax controversy. Being both a tax attorney and CPA provides clients with the best of both worlds. For more information, please visit www.taxproadvocate.com.

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If you find yourself on the wrong end of an IRS tax inquiry into your personal financial affairs or whether you have failed to settle your IRS debt then there is a good chance that you will require some IRS tax debt settlement help.

Remember the sanctions that the IRS can use against you in the event that they believe you have an outstanding obligation that you have failed to pay, despite their warnings are quite severe. Initially the IRS will attempt to recover any amounts due from you directly. If you do not respond to their correspondence and continue to decline or avoid paying then they will likely move to the next step in their enforcement process.

The best advice, should you find yourself in this situation, at this point would be to seek help from a suitably qualified and licensed IRS tax attorney. They will be able to provide you with the best advice on how to deal with the IRS in your situation.

If you do however continue to do nothing the next step for the IRS would be to move to wage garnishment. This is a process by which they require your employer to pay over a significant part of your wages at the point of payment to you. If unexpected this can severely compound your financial difficulties and you would definitely need to seek IRS debt settlement help at this point.

If you do not have an employer, and are self-employed the IRS will move straight to an IRS bank levy whereby they will require your bank to freeze your accounts and pay over a proportion to them to settle off your tax debt.

This type of action will potentially leave you without any control over your finances and this could lead to further very damaging losses. In order to avoid this you need to utilize the services of an IRS tax attorney and get some sensible IRS tax debt settlement help