Blog by BR Accounting and Tax Service

Help there’s a Lien! Or a Levy!?

  • BR Accounting And Tax Service

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I hope you have managed to stay safe and well! We focus on resolving tax issues in Prince William County and throughout the lower Northern Virginia area.

So, the IRS finally got around to notifying the “World” that you have a lien against you. Emphasis is placed on the word “notifying”, because the Notice of a Federal Tax Lien (NFTL), is just that a notice. In case you’re unaware a lien arises statutorily at the time of the IRS assessing a tax upon a taxpayer. This is automatic. The IRS will normally not issue the NFTL, unless you currently owe $10K or more. The aforementioned notice is just to let everyone know, that unless you have a perfected interest in a particular asset belonging to the taxpayer already, you will be in second position or lower, should you try to foreclose on said asset, in attempt to collect what is owed. Remember, if the NFTL is bothersome to you, there are ways to get the lien withdrawn as well (or receive approval of Subordination). However, the lien will most likely not be withdrawn by the Service by simple request, unless the taxpayer can prove that the lien being in place imposes an undue hardship upon the taxpayer. This is usually only possible if the taxpayer can demonstrate that keeping gainful employment depends on not have this lien made public. Examples of such taxpayers are law partners, business partners, etc., that have it in their contracts that such a notice is grounds for expulsion or termination.

I recently wrote that the IRS is ready to get back to the business of collecting monies owed to the Treasury. So, if you have had the misfortune of receiving the final letter (and have not had the time to respond), you may be about to be subject to a levy on your wages and/or bank account. Should this happen, all is not lost. If you act quickly, you can salvage some of your bank funds, and maybe keep more of the money from your paycheck. As far as the bank levy is concerned, you do have approximately 21 days to resolve the situation from the date of the actual levy. This is because, although the money is no longer in your bank account, the money is held in suspense for about 21 days before the money is actually transferred to the U.S. Treasury. You’re entitled to one month’s expenses in your bank account (garnishment of your paycheck has to allow for basic living expenses), but you would have to request the funds be returned. Tax payer would need to prove that more than one month’s expenses would be needed and that such would help the IRS collect the amount currently due.

What the IRS is really after, with all of these actions is a conversation with the taxpayer (or the taxpayer’s representative), to discuss how the taxpayer will meets their tax obligation

If you feel as though you may be one of the taxpayers having trouble with staying or becoming compliant with your tax obligations, We can help!. Feel free to contact us at your leisure.