Are you like many Dallas area residents against whom the Internal Revenue Service has filed a Federal Tax Lien? Or perhaps the Internal Revenue Service has not actually file the Lien yet, but they are threatening you, over and over again, to pay your Federal Tax Debt immediately or suffer the consequences of the Lien. The good news is that you are not alone, and that a Dallas area attorney licensed in Tax Law can help you. The bad news, unfortunately, is that your situation may get much, much worse, particularly if you do not seek help from a Dallas area Tax Attorney immediately.
When you first saw the notices warning you of an impending Lien, you might have ignored them. Perhaps you have survived prior financial or legal crises, such as defaulting on a loan or being taken to court. Regardless of what you have been through this far, facing the Internal Revenue Service and a Federal Tax Lien is completely different. This time, you are not up against a bank or an angry litigant. You are in effect fighting the United States Federal Government when you take on the Internal Revenue Service. Do not take this matter lightly.
Why Did the Internal Revenue Service come after me with a Federal Tax Lien?
When the Internal Revenue Service uses the Federal Tax Lien as one of their options to collect your Federal Tax Debt, typically it is because less oppressive measures have not worked. The Internal Revenue Service uses Federal Tax Liens because they work. In a sense, a Federal Tax Lien puts the Internal Revenue Service in line ahead of you to take money from the sale of your home, whether that sale takes place tomorrow or years from now. When you eventually do sell your home, the Federal Tax Lien allows the Internal Revenue Service to legally take as much money from the sale of your home as is needed to pay off your Federal Tax Lien.
After the Internal Revenue Service attaches a Federal Tax Lien against your property, you will receive an important letter stating:
- The property address against which the Federal Tax Lien is filed;
- The Federal Tax Lien amount;
- The county in which the lien is recorded; and
- Contact information for the Internal Revenue Service.
Here is what makes the Federal Tax Lien so effective. If you are unable to pay the Internal Revenue Service what you owe them, the odds are good that you have other debts on which you are not current. You may be considering selling your home, taking most of the profit to catch up payments on all of your debts, and using some of it as a down payment on a more affordable home. As soon as the Internal Revenue Service files a Federal Tax Lien against your home, you lose that option. All of the profit you’re your home sale goes directly to them, until the Lien is paid off, and you have no recourse to stop them. You cannot use those funds to get current on your other debts or even to make a down payment on a more affordable home; the Internal Revenue Service takes all of it.
Consider the other ways a Federal Tax Lien can make your life difficult:
- Retirement or Other Large Financial Decisions: If your master plan financially includes cashing out the equity you worked so hard to build-up toward retirement or college for your children, you may need a new plan. Once a Federal Tax Lien is in place, the Internal Revenue Service has first dibs on your valuable equity, not you.
- Your Credit Score: Should Equifax, Experian, and TransUnion—the major credit-reporting agencies—learn of your Federal Tax Lien, expect that your credit score may decrease. A lower credit score could mean you will pay higher interest rates on future credit or possibly be denied credit, insurance or employment.
- In a bitterly ironic twist, your Federal Tax Lien could make it more difficult for you to pay off your Federal Tax Debt. Pretend you decided to whatever it took to pay-off your Federal Tax Debt to get your Lien removed; you found a job with much better pay that just happened to be far enough away that you would need to move to take it. Simple, right? Just sell your current home, take the profits as a down payment on your new home closer to the better paying job. Only it is not that simple once a Federal Tax Lien is attached to your property. The moment you sell, the Internal Revenue Service takes your home sale profit, not you, to pay off your Federal Tax Lien. You could be left without enough money for that down payment, which means you cannot take the better paying job at all. Federal Tax Liens have a way of altering your life dramatically.
Even worse, if you do decide to clear your Federal Tax Lien by selling your home and applying the profits to the Lien, you might still owe Internal Revenue Service afterward. Particularly when the Dallas housing market is weak, your home sale profit may not be enough to satisfy the Lien. If that is the case, you will be without a home or the down payment to buy a new home and still entangled with the Internal Revenue Service.
Worse still, though, is the possibility that after you sell your home and turn the proceeds over to the Internal Revenue Service, you might not have enough leftover to pay-off your mortgage. Should that happen, you will be without a home, without funds for a down payment on another home, and still owing on a home that someone else now occupies.
So What Can I Do?
First and foremost, find a Dallas area attorney licensed in Tax Law. Do not be so naïve to believe that you can successfully fight this battle on your own. Realistically, if, on your own, you were unable to stop the Internal Revenue Service from filing the Lien in the first place, how can you expect to get the Lien removed? Do you really think you can go up against the United States Federal Government alone and emerge victorious?
Consider this: Often the Internal Revenue Service accepts even a fraction of what you owe as payment in full on your Federal Tax Lien. Has the Internal Revenue Service ever told you that in their intimidating letters and phone calls? Negotiating a reduced settlement takes know-how, skill, confidence and past experience. Do not risk making your situation worse or waste any more time being afraid of the Internal Revenue Service. Contact a Dallas area attorney at Tax Law Home today. Get the aid you need to protect what you and your family have worked so hard to create.