BUSINESS TAXES: WHAT IS AN IRS LIEN?
If you have received a notification of a federal tax lien against your business, it is a serious matter and it shouldn’t be taken lightly. Many businesses have faced this problem, so thankfully you are not alone and there are solutions readily available. The most important thing you can do as a first step is to get familiar with what a federal tax lien is, why it happens and how to deal with it.
WHAT IS A FEDERAL TAX LIEN?
It is important to know what a federal tax lien is. A federal tax lien is the government’s legal claim against your business assets. An asset is property owned by a person or business and is regarded as having value and available to meet debts. The IRS will file a lien as a result of tax debt not being paid.
A tax lien is the method that the IRS uses to notify the public that it now has a right to your property. Liens are issued by the IRS and filed with the local Public Recorder’s office. They are a public record so that you or anyone else can locate a filing. By filing a lien, the IRS is marking your business assets such as bank accounts, building, land, etc.n so that if you sell any of these, the IRS is in line to collect the proceeds of the sale.
WHAT A FEDERAL TAX LIEN IS NOT
They are not the IRS’ way of actually taking anything from you. A lien doesn’t mean the IRS has taken your business’s assets. That is an IRS levy: an enforced collection action by the IRS.
WHY DID THIS HAPPEN?
There is a good chance that a lien will be filed against your Federal Employment Identification Number (EIN) or Social Security Number (SSN) if you owe back taxes for a period of time and are unable to pay in full. There are certain limiting thresholds and case-specific circumstances that may affect when a tax lien will be filed, but you should know that when it is filed, it will greatly affect your ability to obtain business credit. A tax lien is public information.
WHAT CAN YOU DO?
In 2011 the IRS implemented “Fresh Start” programs to help alleviate some of the collection pressure that taxpayers were more commonly faced with due to the economic downturn. Some of these programs have allowed for liens to be withdrawn or even prevented the liens from being filed in the first place. However, there are specific criteria that each case must meet to receive these benefits from the IRS.
It is in a business owner’s best interest to try to avoid a tax lien regardless of the amount of tax debt his/her business has. Although there are procedures such as appeals or certain resolutions that could stop the lien from being filed, if it has already been filed it’s important to act quickly to avoid further damage to the business. Dealing with this issue should be a business owner’s top priority. Luckily, CuraDebt Tax is here to help you with all of your tax needs, personal and business related.
Being aware of the possible solutions is the first step to resolving your issue. If you would like to learn more about how we can help you release a tax lien or help you with other tax related issues, contact us today. 1-877-999-0486