Understanding Tax Liens and How They Affect your Financial Freedom

Understanding Tax Liens and How They Affect your Financial Freedom

If you do not pay your taxes in full, the IRS may impose a tax lien to ensure you clear the debt. This legal claim can apply to your home, real-estate property, and business. The IRS can also impose it on your financial assets, including bank accounts, retirement plans, stocks, and securities.

It is vital to enroll in a tax repayment program when you owe the IRS. This measure will help you avoid significant debt and other consequences like a tax lien. Here, we provide more details about the effects of a lien and how to prevent it.

How Does a Tax Lien Affect Your Financial Freedom?

Once the IRS imposes a tax lien, you will lose control over the affected assets. This means that you cannot make financial transactions like selling or trading stocks. It is also impossible to sell these assets and invest in an income-generating venture.

The IRS provides taxpayers with a specific duration to clear their debts. If you did not repay what you owe after a lien imposture, they might levy your property to recover the unpaid amount.

Another way a tax lien can affect your financial freedom is by jeopardizing a home resale. Since many buyers search titles before purchasing a property, they can quickly identify if the IRS seized your home. This issue may scare away interested parties and make it tough to sell your property within a specific duration.

Before April 2018, the IRS included tax liens in credit reports. This issue made it tough for the affected parties to obtain financing. While the IRS passed policies to remove tax liens from credit reports, such an issue can still affect funding.

First, you may not have enough assets to act as collateral. Besides, an IRS lien on assets like your stocks will make it challenging to generate money for paying existing loans and lower your credit score.

How to Deal With a Tax Lien

The best way to deal with an IRS tax levy is to enroll in a repayment plan. The IRS offers various Fresh Start programs to help taxpayers repay their debt within a reasonable duration.

Your eligibility for such a plan will depend on the amount you owe. It can also vary based on if you filed past returns and paid delinquent taxes.

When wondering if you qualify for IRS debt relief, consult FinishLine Tax Solutions. Our experts can evaluate your situation to determine eligibility.

They can also help you apply to the debt relief programs provided by the IRS. Such include:

The IRS will provide a repayment schedule if you qualify for such programs. They will also require you to offset the amount within a specific duration based on the selected option.

When you start clearing your debt, the IRS will pause collection measures like a tax lien. They will also stop adding fines and penalties if you stick to the payment schedule.

How to Avoid a Tax Lien

Tax liens have significant adverse effects on your finances and freedom. Understanding how to avoid them can protect your assets and help you prevent related consequences.

Pay all the taxes you owe before the IRS deadline to prevent debt and tax liens. Further, counter-check your return forms before submitting them to ensure they have accurate figures.

If you cannot clear your taxes for the current year, contact the IRS promptly to enroll in a repayment program. Other measures you can use to avoid tax liens are getting tax filing services from professionals at FinishLine Tax Solutions and paying monthly.

Protect Your Financial Freedom Today

Preventing tax liens and enrolling in an IRS repayment program will retain your financial freedom. At FinishLine Tax Solutions, we can help you determine how to avoid adverse effects of IRS debt collection measures.

Our tax resolution service experts can also negotiate a suitable repayment program for your financial situation. Contact us today to learn more about tax liens and protect your assets.

How to Avoid a Tax Lien

A tax lien is a charge levied by the government on your land, which includes commercial properties and other capitals. It is only applicable for a citizen if they are behind on clearing the due of their income tax.

A tax lien can also be defined as a government warning before imposing a tax levy. The tax levy is the land’s direct seizure to fund the taxes due. Tax levies can entail lining up your salaries or seizing bank accounts and assets, making you run for professionals from a reputed tax resolution services company.

How to avoid tax lien? 

To help you avoid such circumstances, we have enlisted a few ways which we hope will be able to help you avoid a tax lien in the future. 

Just pay your bill on time.

Sounds a little too obvious? Well, that’s because it is. 

Now, you might be thinking to yourself that you would not even be here if you had acted according to that advice beforehand. Well, consider it a reminder for next time. It takes lesser time, lesser money, and lesser effort to do that. 

While you are trying to pay off a tax lien, you would have to pay your tax in full in addition to extra fees. Several ways can help you get out of the situation, but none of them work perfectly as reminding yourself to pay your bill in time. 

How? We can shed some light on that for you. 

There are only three things you need to get your hands on for this process to go smoothly. 

  • Firstly, you need the help of a third-party service provider.
  • Next, you need an actively functioning credit or debit card.
  • Finally, you need a bank account on which the lien has been levied. 

An easy alternative to the third-party service provider would be the Electronic Federal Tax Payment System or EFTPS. 

Lodge an appeal

You can seek a due process hearing from the IRS Appeals Office if you want a relation analysis or a levy notice. 

However, if you happen to differ from the IRS employee’s position on a fee or tax, you can arrange a meeting with the employee’s boss and ask the Appeals Office to put your case on a review.

Subscribe to an IRS plan 

Your tax balance will keep accruing interest and fees unless you decide to pay it off. However, there is one way you can persuade the IRA to exempt your public record of the federal tax obligation. This process is called a direct debit installment agreement. Here, all you have to do is give the IRS the green signal to deduct at least three consecutive installments directly from your bank account.

It is essential to mention that subscribing to this IRS plan cannot be deemed a one-fits-all option since you would still be required to pay your tax debt. 

Need to file your income tax? Cannot think of ways of avoiding a tax levy? Well, Finish Line tax solutions, like its name, is hell-bent on providing their customers with the best tax lawyer in Dallas, TX. To know more about their services, call at (855) 950-2720.