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Federal Tax Levy Collection Actions in Detail (Part I)

Federal Tax Levy Collection Actions in Detail (Part I)

Levy: A seizure of property

While a federal tax lien is a legal claim against your property, a levy is a legal seizure that actually takes your property (such as your house or car) or your rights to property (such as your income, bank account, retirement account or Social Security payments) to satisfy your tax debt.

The IRS can’t seize your property if you have a current or pending Installment Agreement, Offer in Compromise, or if the they agree that you’re unable to pay due to economic hardship, meaning seizing your property would result in your inability to meet basic, reasonable living expenses.

What you should do if your property is seized (“levied”)?

If your property or federal payments are seized, call the number on your levy notice or 1-800-829-1040. If you’re already working with an IRS employee, call him or her for assistance.

Next week: Reasons the IRS may seize (“levy”) your property or rights to property

(IRS Publication 594 and IRS.gov) (TTT 03/24/2020

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Federal Tax Lien Collection Actions in Detail (Part VII)

Federal Tax Lien Collection Actions in Detail (Part VII)

How to make the Federal Tax Lien secondary to other creditors (“subordination”) ?

A “subordination” is where a creditor is allowed to move ahead of the government’s priority position. For example, if you’re trying to refinance a mortgage on your home, but aren’t able to because the federal tax lien has priority over the new mortgage, you may request that the IRS subordinate their lien to the new mortgage. For more information on whether you qualify for a subordination, see Publication 784, How to Prepare an Application for a Certificate of Subordination of Federal Tax Lien. To watch an instructional video about Publication 784, visit www. irsvideos.gov/Individual/IRSLiens.

Appeal rights for withdrawal, discharge or subordination

If your application is denied you will receive Form 9423, Collection Appeal Request and Publication 1660, Collection Appeal Rights, with an explanation of why your application was denied. If the IRS denies your request for a withdrawal, discharge, or subordination, you may appeal under the Collections Appeals Program.

Next week: Federal Tax Levy Collection Actions in Detail

(IRS Publication 594 and IRS.gov) (TTT 03/17/2020)

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Federal Tax Lien Collection Actions in Detail (Part VI)

Federal Tax Lien Collection Actions in Detail (Part VI)

How to apply for a “discharge” of a Federal Tax Lien from property?

A “discharge” removes specific property from the federal tax lien. There are several circumstances under which a discharge may be granted. For example, the IRS may issue a Certificate of Discharge if you’re selling property and the government receives its interest through the sale. For more information on whether you qualify for a discharge, see Publication 783, Instructions on How to Apply for a Certificate of Discharge of Property from Federal Tax Lien. To watch an instructional video about Publication 783, visit www.irsvideos.gov/Individual/ IRSLiens.

Next week: How to make the Federal Tax Lien secondary to other creditors (“subordination”)

(IRS Publication 594 and IRS.gov) (TTT 03/10/2020)

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Federal Tax Lien Collection Actions in Detail (Part V)

Federal Tax Lien Collection Actions in Detail (Part V)

What are reasons the IRS will “withdraw” a Federal Tax Lien?

A “withdrawal” removes the Notice of Federal Tax Lien from public record. The withdrawal tells other creditors that the IRS is abandoning their lien priority. This doesn’t mean that the federal tax lien is released or that you’re no longer liable for the amount due.

The IRS may withdraw a Notice of Federal Tax Lien if:

· You’ve entered into an Installment Agreement to satisfy the tax liability, unless the Agreement provides otherwise. For certain types of taxes, the IRS routinely grants Notice of Federal Tax Lien withdrawal requests if you’ve entered into a direct debit installment agreement and meet certain other conditions,

· It will help you pay your taxes more quickly,

· The IRS didn’t follow their procedures,

· It was filed during a bankruptcy automatic stay period, or

· It’s in your best interest and in the best interest of the government. For example, this could include when your debt has been satisfied and you request a withdrawal.

For more information, see Form 12277, Application for Withdrawal of Filed Notice of Federal Tax Lien or the instructional video at www. irsvideos.gov/Individual/IRSLiens/LienNoticeWithdrawal.

Next week: How to apply for a “discharge” of a Federal Tax Lien from property

(IRS Publication 594 and IRS.gov) (TTT 03/03/2020)

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Federal Tax Lien Collection Actions in Detail (Part IV)

Federal Tax Lien Collection Actions in Detail (Part IV)

What are reasons the IRS will “release” a Federal Tax Lien?

A “release” of a Federal Tax Lien means that the IRS has cleared both the lien for your debt and the public Notice of Federal Tax Lien. The IRS does this by filing a Certificate of Release of Federal Tax Lien with the same state and local authorities with whom they filed your Notice of Federal Tax Lien. They will release your lien if:

· Your debt is fully paid,

· Payment of your debt is guaranteed by a bond, or

· You have met the payment terms of an Offer in Compromise which the IRS has accepted, or

· The period for collection has ended. (In this case, the release is automatic.)

For more information, see Publication 1450, Instructions on How to Request a Certificate of Release of Federal Tax Lien.

Next week: What are reasons the IRS will “withdraw” a Federal Tax Lien?

(IRS Publication 594 and IRS.gov) (TTT 02/25/2020)

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Federal Tax Lien Collection Actions in Detail (Part III)

Federal Tax Lien Collection Actions in Detail (Part III)

How to appeal a Notice of Federal Tax Lien?

Within five business days of the first filing of the Notice of Federal Tax Lien for a specific debt, the IRS will send you a Notice of Federal Tax Lien Filing and Your Right to a Collection Due Process Hearing. You’ll have until the date shown on the notice to request a Collection Due Process hearing with the Office of Appeals (30 days from the date on the letter). Send your Collection Due Process hearing request to the address on the notice. For more information, see Form 12153, Request for a Collection Due Process or Equivalent Hearing.

After your Collection Due Process hearing, the Office of Appeals will issue a determination on whether the Notice of Federal Tax Lien should remain filed, or whether it should be withdrawn or released. If you disagree with the determination, you have 30 days after it’s made to seek a review in the U.S. Tax Court.

In addition to any Collection Due Process rights you may have, you may also appeal a proposed or actual filing of a Notice of Federal Tax Lien under the Collection Appeals Program.

Next week: What are reasons the IRS will “release” a Federal Tax Lien?

(IRS Publication 594 and IRS.gov) (TTT 02/18/2020)

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Federal Tax Lien Collection Actions in Detail (Part II)

Federal Tax Lien Collection Actions in Detail (Part II)

What to do if a Notice of Federal Tax Lien is filed against you?

You should pay the full amount you owe immediately. The Notice of Federal Tax Lien only shows your assessed balance as of the date of the notice. It doesn’t show your payoff balance or include our charges for filing and releasing the lien. To find out the full amount you must pay to have the lien released, call 1-800-913-6050 or 859-320-3526 if you are calling from outside of the United States. If you have questions, call the number on your lien notice or 1-800-829-1040 or visit www.irs. gov/Businesses/Small-Businesses-&-Self-Employed/Understanding-a-Federal-Tax-Lien, or view instructional videos at www.irsvideos.gov/ Individual/IRSLiens.

Next week: How to appeal a Notice of Federal Tax Lien

(IRS Publication 594 and IRS.gov) (TTT 02/11/2020)

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Federal Tax Lien Collection Actions in Detail (Part I)

Federal Tax Lien Collection Actions in Detail (Part I)

What is a federal tax lien? A lien is a legal claim against all your current and future property. When you don’t pay your first bill for taxes due, a lien is created by law and attaches to your property. It applies to property (such as your home and car) and to any current and future rights you have to property.

What is a Notice of Federal Tax Lien? A Notice of Federal Tax Lien gives public notice to creditors. The IRS files the Notice of Federal Tax Lien so they can establish the priority of their claim versus the claims of other creditors. The Notice of Federal Tax Lien is filed with local or state authorities, such as county recorder of deeds or the Secretary of State offices.

If a Notice of Federal Tax Lien is filed against you, it may be reported by consumer credit reporting agencies. This can have a negative effect on your credit rating and make it difficult for you to receive credit (such as a loan or credit card). Employers, landlords and others may also use this information and not favorably view the fact that a Notice of Federal Tax Lien has been filed against you. However by law, there will be no filing of the Notice of Federal Tax Lien and no levies issued to collect an individual shared responsibility payment associated with the Affordable Care Act.

Next week: What to do if a Notice of Federal Tax Lien is filed against you.

(IRS Publication 594 and IRS.gov) (TTT 02/04/2020)

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What are the Various Collection Actions?

What are the Various Collection Actions?

There are several words and phrases particular to the collection process. Below, the IRS has defined some of the most common collection terms:

Federal Tax Lien: A legal claim against all your current and future property, such as a house or car, and rights to property, such as wages and bank accounts. The lien automatically comes into existence if you don’t pay your amount due after receiving your first bill.

Notice of Federal Tax Lien: A public notice to creditors. It notifies them that there is a federal tax lien that attaches to all your current and future property and rights to property.

Levy: A legal seizure of property or rights to property to satisfy a tax debt. When property is seized (“levied”), it will be sold to help pay your tax debt. If wages or bank accounts are seized, the money will be applied to your tax debt.

Seizure: There is no legal difference between a seizure and a levy. Many times, the IRS uses both terms interchangeably.

Notice of Intent to Levy and Notice of Your Right to a Hearing: Generally, before property is seized, the IRS has to send you this notice. If you don’t pay your overdue taxes, make other arrangements to satisfy the tax debt, or request a hearing within 30 days of the date of this notice, they may seize your property.

Summons: A summons legally compels you or a third party to meet with the IRS and provide information, documents or testimony.

Passport Actions: The Department of State will not issue or renew a passport to any individual who has been certified by the IRS as having a seriously delinquent tax debt and may revoke a passport previously issued to such individual.

Next week: Additional information on the IRS Federal Lien

(IRS Publication 594 and IRS.gov) (TTT 01/28/20)

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The IRS Collection Appeals Program (Part III)

The IRS Collection Appeals Program (Part III)

What to do if you disagree with the Appeal’s decision?

If you file a Collection Appeals Request and do not agree with Appeals decisions, you cannot proceed to court.

Instances in which you can pursue the Collection Appeals Program include, but aren’t limited to:

· Before or after the IRS files a Notice of Federal Tax Lien

· Before or after the IRS seizes (“levy”) your property

· After the IRS rejects, terminates, or proposes to terminate your Installment

Agreement (a conference with the manager is recommended, but not required). Submit your written Installment Agreement Appeal request, preferably using Form 9423, Collection Appeal Request, within the timeframe listed in your notice.

For more information about the Collection Due Process and Collection Appeals Program, please see Publication 1660, Collection Appeal Rights or visit www.irs.gov/Individuals/Appealing-a-Collection-Decision.

Next week: We will explain various collection actions

(IRS Publication 594 and IRS.gov) (TTT 01/21/20)