This week we continue our discussion of federal tax liens.
Once you have received a Notice of Federal Tax Lien, you should also receive within a few days, a Notice of Your Right to a Collection Due Process Hearing. If you believe you have valid grounds to dispute any element of the tax lien, you need to respond within 30 days.
If you are not represented by counsel at this point, you should rapidly obtain legal representation for your further dealings with the Internal Revenue Service (IRS).
This is because one of the means by which the IRS can obtain the property necessary to satisfy the tax lien is by a levy against your property. A tax levy, or a seizure, is similar to a creditor repossessing secured property to satisfy a loan obligation. The IRS can levy a substantial portion of your property to satisfy the tax lien.
If the IRS has decided to obtain a levy, you will receive a Final Notice of Intent to Levy and they will also send notice indicating you have a right to a hearing 30 days prior to the levy. Of course, there are exceptions, and you should discuss with your attorney whether your matter could involve one of the exceptions to this notice requirement.
The IRS levy authority is broad. They can seize your rights to your wages, salary or commission and your bank accounts. This can be catastrophic for many people, as the bank will hold your funds 21 days after the levy and if you have not resolved this matter, the bank will then transfer the funds to the IRS.
They also may levy any federal payments, some of which include Social Security payments and contractor or vendor payments. And disturbingly, they can also seize your home and sell it pay the tax lien.
Next week, we will discuss what you can to prevent some of these catastrophic results of a tax lien.
Source: IRS.com, "The IRS Collection Process," Publication 594 (Rev. 4-2012)