What is a property tax liens?
What is a Tax Lien and should I be worried?
Most people find out about Tax Liens when they get a ‘Notice of Tax Lien’ in the mail, try to do something with their property, or get scary letters from marketing companies. This is never fun but taking the mystery out of tax liens can help you make informed decisions to help you reach your financial goals.
What do I do when I get ‘Scary Letters’ about Tax Liens?
CALL a Tax Professional to get good advice. There are MANY SCAMS out there as tax liens are public records. Be wary of scary notices and threats to have you arrested or that threaten other extreme actions. Get good advice by calling a Tax Professional. Guardian Tax Law will review tax letters free of charge to help taxpayers avoid scams.
The IRS almost never calls people. Only a Revenue Officer with an IRS ID will ever call an individual and they will NEVER ask for immediate payment other than authorized IRS payment sources.
What is a Tax Lien?
Tax Lien is the government’s way to try to make sure they get paid when a taxpayer owns property. It is also a general notice to other creditors.
A Tax Lien is filed at the County Recorder’s office in the County where the IRS or State thinks the taxpayer has real property. Tax liens are public records and the County Recorder’s office has records of all tax liens filed against property in the County.
The lien will attach to any and all real property in that county. Homes, Rentals, Commercial property, vacant lots, etc.
Can I buy/sell a property if I have a tax lien?
Yes, you can! Not all mortgage companies or realtors are familiar with how to do this but we work with excellent partners that help taxpayers buy and sell the property.
Selling Property – When a property is sold any excess profit after the sale will go to pay Liens against a property. If there is little to no equity you can still sell property too!
Buying Property – if you have a tax lien filed against you can still buy property. The IRS or State just needs to show that the tax debt connected to the lien has been ‘resolved’. This can mean
- The Taxes are paid in full.
- An Installment Agreement has been set up and is being paid.
- The taxes owed have expired.
- The taxes have been settled with an Offer In Compromise.
Can I stop a Tax Lien from being filed or remove a Tax Lien?
It is always easier to stop a Tax Lien from being filed than it is to remove one. Responding and addressing a situation quickly is important to preventing a tax lien.
If your tax debt is below $50,000.00 for the IRS (each state varies) you can prevent the filing of tax liens by acting quickly to set up an Installment Agreement to address the balance.
If you owe more than $50,000.00 you can do what is called a paydown to get the balance below that amount.
If the filing of a tax lien will affect your employment (insurance brokers, stock brokers, realtors, etc.) you can request the IRS do not file a tax lien when they normally would. The IRS does not like to approve these requests though.
Removing a Tax Lien
Once a Tax Lien has been filed you can usually remove the tax lien when:
- The balance is under $50,000.00 and three consecutive payments have been made.
- The taxes are paid in full.
- The taxes are settled with an Offer In Compromise.
- By showing that the taxes should not have been filed and the tax lien should be removed.
It is very important not to ignore Tax Lien letters but contact a reputable company with good reviews to obtain good information and advice. As mentioned earlier tax liens are public records and many marketing companies/scams will flood taxpayers with scary letters.