05 Jun 5 Things You Don’t Know about Tax Liens
A tax lien is not a word any taxpayer likes to hear as it always means that you’re getting into trouble with the IRS.
When you neglect or refuse to pay your tax bills, the IRS usually resorts to placing a federal tax lien on your property. That means that the government has essentially claimed possession of your property.
Having that in mind, you naturally want to avoid getting a tax lien in the first place by paying your taxes on time.
That’s a simple explanation of what tax liens are, but surprisingly, a lot of people know very little about them, or the knowledge they do have is either not complete or flat out wrong.
With that in mind, let’s take a look at some facts about tax liens you probably don’t know.
1. The IRS Can Impose a Tax Lien on You for Any Unpaid Federal Tax
A tax lien can be connected to almost any kind of federal tax, including income tax, estate tax, gift tax, and many more.
However, in reality, the IRS won’t opt for a tax lien immediately, even though they can (we’ll explain soon). They will usually opt for notices and warnings, and leave the lien as a last resort.
2. Tax Liens Arise Automatically
Yes, as astonishing as that may seem, it is true. Under the Internal Revenue Code, a tax lien can arise automatically or by operation of law, after only ten days of unpaid taxes.
What’s more, this rule is effective retroactively as well, i.e., from the date of assessment, even if the ten-day period expires after this assessment date.
3. It Also Applies to Property Acquired Later On
According to the rule established in the case – Glass City Bank vs. The US – a tax lien can apply to both the property you owned when it was given, but also to all the property you obtain afterward, for as long as the tax lien lasts.
4. Tax Lien Expires Automatically After Ten Years
As is the case with most things in the US law, the tax lien also becomes void after ten years have passed since the date of assessment.
Unfortunately, there are many ways the IRS can use to extend this period if they want to.
5. A Tax Lien Doesn’t Force You to Sell Your Property
You are under no obligation to sell your property once the IRS slaps a tax lien on it. It merely ensures that the IRS will get part of the payment once you do decide to sell.
That’s the general way tax liens are worth it for the IRS. Whichever way you look at it though, the IRS will get what they are owed.
But, what if you don’t have an obligation? In many cases, a regular citizen like you cannot know if they do or don’t owe something to the IRS. In such cases, it’s best to get help from a professional tax resolution service like Golden Tax Relief.
We specialize in helping people who are having problems with the IRS as we know how the system operates and how it can trick honest citizens like you. Give us a call if you want to know more!