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Methods for resolving a federal tax lien

| Dec 8, 2017 | tax liens

A variety of reasons could cause a person in Maryland to fall behind on his or her federal taxes, but the federal government has substantial powers to compel someone to pay. A federal tax lien represents the government’s claim on a person’s personal or business property, which includes real estate. The Internal Revenue Service takes this step to secure the amount that is owed to them. People that are dealing with this action have some options for managing the consequences and potentially preventing the forced sale of their property.

A lien can be resolved quickly by paying the entire tax bill. The IRS will officially remove claims on property within 30 days of payment. Those who do not have the means to pay the whole bill could pursue other options, which are discharge, subordination or withdrawal. If approved by the IRS, any one of these approaches could provide time for a tax debtor to sell his or her property or create a payment plan.

For example, a debtor that qualifies for a discharge will have his or her lien removed by the IRS. With a subordination, the lien remains, but the IRS grants other creditors the ability to act upon the property. This status could enable a debtor to obtain a loan or mortgage despite the presence of a lien. When the IRS grants a withdrawal, it lifts the lien, but the tax bill remains due. Debtors typically must adhere to a payment plan to achieve a withdrawal.

A taxpayer that is delinquent on his or her tax bills might avoid losing his or her property by reaching out to an attorney for representation. A lawyer that is knowledgeable about tax liens could determine whether someone qualifies for any IRS programs to resolve his or her tax bills and remove liens. An attorney could prepare forms and handle communications with the IRS to guide his or her client through the tax bureaucracy.