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Our firm deals with taxpayers in Winchester, VA, and Martinsburg, WV who owe back taxes. If you have back tax debt, the IRS may place a lien on your property. A lien is a legal claim against all your current and future property. When you don’t pay your first bill for taxes due, a lien is created by law and attaches to your property. It applies to property (such as your home and car) and to any current and future rights you have to property.
What is a Lien Release?
A “release” of a Federal Tax Lien means the IRS has cleared both the lien for your debt and the public Notice of Federal Tax Lien. When your debt is cleared, the IRS will file a Certificate of Release of Federal Tax Lien with the same state and local authorities with whom they filed your Notice of Federal Tax Lien. The lien will be released if:
• Your debt is fully paid,
• Payment of your debt is guaranteed by a bond, or
• You have met the payment terms of an Offer in Compromise which the IRS has accepted, or
• The period for collection has ended. (In this case, the release is automatic.)
What is a Lien Withdrawal?
A “withdrawal” removes the Notice of Federal Tax Lien from public records. The withdrawal tells other creditors that the IRS is abandoning its lien priority. This doesn’t mean that the federal tax lien is released or that you’re no longer liable for the amount due. If you owe less than $25,000, (or can pay off enough to reduce the amount owed to less than $25,000), and you enter into a direct debit installment agreement, you can get a lien withdrawn. After the third payment, you can file Form 12277 to have the Notice of Federal Tax Lien withdrawn.
Other than this exception, the Notice of Federal Tax Lien will remain in place while you are repaying the tax debt. There are a few other circumstances when the IRS may consider a lien withdrawal. These include:
● It will help you pay your taxes more quickly,
● The IRS didn’t follow IRS procedures,
● It was filed during a bankruptcy automatic stay period, or
● It’s in your best interest and in the best interest of the government. For example, this could include when your debt has been satisfied and you request a withdrawal.
To apply, file Form 12277, Application for Withdrawal of Filed Notice of Federal Tax Lien.
What is a Lien Discharge?
A “discharge” removes a specific property from the federal tax lien. There are several circumstances under which a discharge may be granted. For example, the IRS may issue a Certificate of Discharge if you’re selling property and the government receives its interest through the sale.
What is Lien Subordination? (making a lien secondary to other creditors)
A “subordination” is where a creditor is allowed to move ahead of the government’s priority position. For example, if you’re trying to refinance a mortgage on your home, but aren’t able to because the federal tax lien has priority over the new mortgage, you may request that the IRS subordinate their lien to the new mortgage.
At Tax Debt Resolution Services of Winchester VA, our mission is to help you eliminate your IRS issues and the stress the IRS has created in your life and help you get back to doing what you do best! We help our clients in Winchester VA, Strasburg VA, Martinsburg WV, and Charles Town WV to resolve their tax debts! If you need assistance please feel free to contact me at 540-662-4432 or brianbarto@libertytax.com.
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