A tax lien, not to be confused with a tax levy, is a hold that the IRS places against some or all your assets. Some what like a warning. Basically the IRS saying “take care of your back tax debt now or we are going to levy you”. By doing so, the IRS is attempting to ensure that it receives payment for the unpaid taxes that you owe. Usually receive a Tax Lien Notice in the Mail via certified mail notifying you of the Lien. A IRS Tax Levy is when they begin to seize your property or rights to property. Tax Levies come in the form of Freezing your Bank accounts, attaching a IRS Wage Garnishment, or even worse the IRS taking your home or even Jail time!
But there are five circumstances by which taxpayers can potentially avoid an IRS tax lien. A Tax Professional like those at Advocate Tax Solutions can help you determine the best method to avoid a tax lien or a more serious tax levy.
1. Pay the Taxes You Owe in Full
If you can afford to pay the taxes that you owe in full, you can stop an IRS lien in its tracks. The IRS allows you to make payments directly from your bank account or by debit or credit card through a third-party processing service. You may also use the Electronic Federal Tax Payment System (EFTPS) to make a secure electronic payment. Or you may go the low-tech route and mail a check or money order, or deliver your payment in person to your local IRS office.
Estimated Tax Payments are especially important if you are self-employed and have no other withholding and
would like to avoid tax penalties when filing your tax return. If you are figuring your end-of-year estimated
tax payment for the fourth quarter of 2013 and you are self-employed, use the worksheet at the top of page 6
of the 2013 Form 1040ES to figure your deduction for self-employment tax. The 2014 Form 1040ES has instructions on how to complete the computation of your estimated tax payment.
Visit This site to set up your electronic payments online:
http://www.irs.gov/uac/EFTPS-The-Electronic-Federal-Tax-Payment-System
Transfer the amount computed to the coupon for the quarter you are paying:
Payment Period Due Dates:
January 1 – March 31, 2014 April 15, 2014
April 1 – May 31, 2014 June 16, 2014
June 1 – August 31, 2014 September 15, 2014
September 1 – December 31, 2014 January 15, 2015*
*You do not have to make the payment due on January 15, 2015, if you file your 2014 tax return
by February 2, 2015 and pay the entire balance due with your return.
Please remember to mail your estimated tax payment by the date on the coupon. Failure to postmark a
payment by the required payment date will result in the incorrect crediting of your payment and may result
in a tax penalty when figuring your return. The payment dates are listed in each Form 1040ES applicable for
that year. If you have any questions regarding these estimated tax coupons, or would like to engage us to prepare or file your payroll or personal income tax returns please to do not hesitate to
contact Advocate Tax Solutions at 847.737.1110.
2. Enter into a Guaranteed Installment Agreement
If you cannot pay your entire tax balance in full, but owe less than $10,000, you may still avoid a tax lien. By entering into a Guaranteed installment agreement, you set an agreement by which the IRS will receive your entire tax balance due in monthly installment payments over 60-72 months. Please note that the amount of each monthly payment and the length of the entire installment agreement vary according to how much tax you owe and when your tax debts expire. You should always consult a tax professional prior to entering into an installment agreement to ensure it is one that will encompass all tax debt owed and is paying a tax liability that is accurate and valid! Advocate Tax Solutions will audit your financials and our Tax Attorneys will defend and analyze risk to ensure the most accurate tax return on file with the IRS. Additionally, we will make sure you get the best deal given your income, assets, and “reasonable collection potential” prior to negotiating a Back Tax Resolution to the IRS.
3. Enter into a Streamlined Installment Agreement
If you owe between $10,000 and $25,000 in unpaid taxes, you can still avoid a tax lien from the IRS. A Streamlined Installment Agreement works much the same way as a Guaranteed Installment Agreement. The end result is the same; you eventually pay your entire amount that you owe in federal income taxes.
4. Pay Down Your Balance
If you owe more than $25,000 in back taxes to the IRS, you must pay down your balance to less than $25,000 to avoid a federal tax lien. This payment must take place before a lien is imposed. Once your unpaid tax balance is below $25,000, you may enter into a Streamlined Installment Agreement.
5. File an Offer in Compromise
If you can only afford to pay a portion of your back federal taxes, you may still avoid a tax lien by filing an Offer In Compromise or Back Tax Settlement. If accepted, an Offer in Compromise allows you to settle your tax obligation with the IRS for less than the total federal taxes owed. But you should be forewarned: the IRS is stringent about accepting Offers in Compromise. The process for reviewing Offer in Compromise applications can be lengthy. There is also no guarantee that the IRS would not impose a tax lien while you are waiting for a decision on your Offer in Compromise application. That is why our proprietary tax case review and financial analysis process coupled with state of the art Tax Settlement Software enables Advocate Tax Solutions and our clients a leg up against others who may be attempting that very same option.
Call (888) 737-0200 or visit our contact us page to schedule an appointment and free analysis with an ATS tax professional today!
ATS | Advocate Tax Solutions | Back Tax Help 