IRS Lien or Levy and How to Dodge Them Both

If you think you need help with IRS lien or levy, there are a few things you should know. For the average layman, all tax burdens may sound the same: debt, lien, and levy— whatever! It’s all a mush of bad news that Uncle Sam isn’t satisfied. The IRS wants there fair share, regardless as to where you are located . Americans from every corner have had to face the difficulty of surprise liens and painful levies.

There are a number of moving parts and factors that can result in a lien. These include the number of withholdings you claim and the revenue from your small business. Either way, back taxes are arguably one of the worst debts to have hanging over your head.

Let’s first take a look at the difference between a lien and a levy. A lien essentially “attaches” to your assets. And that means that because you owe money over a high enough threshold, the government has a claim to a share of your earnings from, for instance, the sale of an asset.

Let’s say you have a classic car that’s worth a substantial amount of money. But you also have a considerable tax lien against you. Upon selling that asset, the government can claim what it feels is owed. However a lien is not just an excuse for the IRS to confiscate your assets willy-nilly. Liens can still cause plenty of problems though. Anyone pulling a credit report is going to see that blemish on your record staring them in the face.

A levy is more immediate and indicates the intention of the IRS to collect what is owed by seizing your assets. Or as the www.irs.gov describes it, “A lien is not a levy. A lien secures the government’s interest in your property when you don’t pay your tax debt. A levy actually takes the property to pay the tax debt…” A levy essentially is the acquisition of your property!

Whether it’s a lien or levy, the simple solution is to pay the balance in full, or perhaps enter into the OIC program as a possible resolution to your debt. But simple, of course, doesn’t always mean easy. A more nuanced (and practical approach) is to get into an arrangement with the IRS or government agency. Work with qualified tax experts such as Business and Financial Solutions, and craft a plan to resolve.

Though an extension may help buy time to pay the full balance, one common approach is to work with your tax expert to procure an installment agreement. An installment agreement is an excellent way to pay down your debt and get right with your credit without having to fork over the entire sum at once.

Another possibility may be an offer in compromise. An offer in compromise (OIC) is not as much of a “sure thing” as an installment agreement and they are more difficult to obtain, but if you end up qualifying, you may be required to pay back less than the amount you originally owed.

Though tax law changes constantly, Forbes described recently how the rules for obtaining an OIC have become more feasible for some citizens the last several years. Though Business and Financial Solutions (BFS) can work with you to help you achieve these resolutions, your best bet is to also work with us to help prevent these occurrences from happening (or repeating) in the future.

While it’s true to say that paying your taxes in full and on time is the best way to avoid an IRS lien or levy, that can be easier said than done in today’s crazy world, especially if you’re doing it alone. Work with the experts at Business and Financial Solutions. We offer excellent rates and customized resolutions with a human touch to help guide you through an otherwise complex process.