Has the unthinkable happened to you? Are you in a panic (or perhaps a rage) trying to figure out how or why the Internal Revenue Service attached a Federal Tax Lien to your Detroit area home? Or perhaps you have received another menacing letter threatening that if you do not pay your Federal Tax Debt immediately, a Federal Tax Lien will be levied against your property. And to make matters worse, you might not even agree with the Internal Revenue Service that you actually owe this debt.
Should the Internal Revenue Service actually levy a Federal Tax Lien against your property, they will provide you with written notice of:
- 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.
What Does This Mean?
First of all, you may not even be certain what a Federal Tax Lien is. When you owe the Internal Revenue Service money and cannot pay them, they may attach a Federal Tax Lien to your property. They use the Lien as an insurance policy of sorts to guarantee that they will eventually get your money. The Lien is a legally binding maneuver that puts the Internal Revenue Service first in line—ahead of you (the property owner) and even the mortgage company (should you still owe on a mortgage)—to receive profits from the sale of your home.
The Internal Revenue Service uses liens because they work. If you are having enough financial problems that you cannot pay your Federal Taxes, more than likely you cannot pay other debts as well. One of your first options may be to sell your home and purchase a cheaper one. And that will be when the Internal Revenue Service will swoop in and collect all the funds from the sale of your home needed to pay-off your Federal Tax Lien. If it was up to you, you might use the profits from the sale of your home to pay a little bit on several of your debts, the Internal Revenue Service included. But once a Federal Tax Lien has been levied against your property, it is not up to you what happens to your home sale profits. The Internal Revenue Service just steps in and takes over.
And do not think that just because the Federal Tax Lien has been filed against you that the Internal Revenue Service will ease up its pressure on you. You will be pursued relentlessly until your Federal Tax Lien is cleared. Until you pay your debt, expect that any or all of these situations may befall you and your loved ones:
- Three major credit-reporting agencies (Equifax, Experian, and TransUnion) may be advised of your Federal Tax Lien. Once that happens, expect your all important credit score to decrease. Then you could be facing higher interest rates on future loans, or be denied credit, insurance or employment.
- The plans you had to use your home’s equity as a financial asset later in life, perhaps for retirement, have just been shattered. The Internal Revenue Service will be the one to benefit from your hard-earned equity, not you.
- You could end up in the nightmare scenario of selling your home and still owing the Internal Revenue Service on your Federal Tax Debt. Especially in today’s declining housing market, the profit from the sale of your home may not be enough to satisfy your Federal Tax Lien. What could be worse than selling your home, having nothing to show for it—no money to purchase another home—and still owing the Internal Revenue Service!
- In an ironic twist, your Federal Tax Lien could even prevent you from paying your Federal Tax Debt. Imagine being offered a better paying job, one that would allow you to quickly pay-off your Federal Tax Debt. You just need to sell your home and buy a new one, as this fabulous new job is in another city. But much of the money you need from the sale of your current home to buy a new home near your new job may go straight past you to the Internal Revenue Service. So you may never be able to take that better paying job because you cannot afford to move. Can you see how your Federal Tax Lien makes you a prisoner in your own home with the Internal Revenue Service holding the keys?
- And worst of all, should you still owe on your home’s mortgage, you may still owe on it even after your home sells. Once the Internal Revenue Service takes what they need to pay-off your Federal Tax Lien, there may not be enough leftover to pay-off your mortgage. Imagine your despair as you see the equity in your home effectively transferred to the Internal Revenue Service, leaving you nothing to purchase another home, and still owing on your old home.
How Do I Stop This Disaster?
Before you do anything else, contact a Detroit area attorney licensed in Tax Law. You may consider yourself to be quite experienced in legal or financial matters, particularly if you have survived past legal battles or financial difficulties. Clearing a Federal Tax Lien is nothing like fending off a lawsuit or aggressive creditors. You aren’t fighting a lawsuit or a bank; you are in essence fighting the United States Federal Government! Whatever expertise you may have, if it was not enough to prevent the Federal Tax Lien from being levied against you, consider getting the help you need to fight the Internal Revenue Service.
Not only are you fighting the Internal Revenue Service—a behemoth—but your adversary does not always tell you the whole truth about your options. A Detroit area attorney licensed in Tax Law knows that the Internal Revenue Service often settles Federal Tax Liens for pennies on the dollar, since getting a little money from you beats getting no money from you at all. Did the Internal Revenue Service mention that in any of their countless letters and phone calls to you?
Fighting a Federal Tax Lien is unlike anything you have ever faced before. Do not be naive or foolish by thinking that it is embarrassing to talk about your tax problems. Contact a Detroit area Tax Attorney today. You need a fighting chance.