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:
- An installment agreement
- An offer in compromise
- Innocent spouse relief
- Penalty abatement
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.
- FinishLine Tax Solutions is a full-service, fully accredited tax resolution firm in Houston, TX, assisting companies and individuals nationwide in resolving tax problems with the IRS. We specialize in areas of back taxes such as IRS wage garnishments, IRS bank levies, and unfiled tax returns. Our team of experts comprised of licensed Enrolled Agents, CPAs, & IRS Tax Attorneys can assist you with IRS Audit Representation and Tax Planning. We are one of the leading tax resolution firms in the nation and your go-to tax relief firm that can take you to the Finish Line. Call us today to learn more about our tax relief process and tax resolution services.
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