If you owe a business or property and you are not paying the taxes on time, you will be entitled of a tax lien and the government will get full rights on your property. The taxing authorities can also seize your property and sell if you fail to pay your taxes.
How does it proceed?
The IRS will file a document against your assets and property called “The notice of Federal Tax Lien”. The document applies to all your business assets and hence the IRS has all rights to sell your property or assets in case you couldn’t pay taxes. In such a case, tax lien help from a professional tax lawyer can be taken.
A tax lien may freeze your business:
It can affect your business badly and a constant headache for all, especially if the business is small. In such a case, businesses not only lose the access to their property, but also it cannot take any type of additional financing. Moreover, your business may be a threat of losing its reliability as your notice of tax lien may appear in the newspaper. You will have a poor credit report because it will be shown on your credit report, which is not good in any way. Beside this, if you are dealing with a real estate business, you could not complete the sale until you have paid the tax lien completely.
How can you prevent your business from getting affected?
Taxpayers can prevent themselves from tax lien by following ways:
- Try to pay taxes on time:
The easiest way not to face this problem is to pay taxes on time. Electronic Federal Tax Payment System (EFTPS) has made it easier for you to pay the taxes. The system is easy to use and fully secure as well.
- Choose guaranteed installment agreement:
There are also installment contracts which make sure the guaranteed payment of tax. This is the best option if you couldn’t pay the lump sum amount of taxes at once. The amount may be different depending upon the length of the agreement. The monthly installments are specified in the agreement and hence, taxpayers can easily avoid the negative effects of a tax lien.
- Streamlined installment agreement:
The IRS tax help has made it sure for you to pay all the taxes on time with the streamlined installment agreement. You must agree that your future taxes will not be late. The functionalities of both agreements are same, but the streamline installment agreement would be chosen if your tax amount is between 10,000$ to 25,000$.
- Non-streamlined installment agreements:
You will have to take tax help services from a professional company if your tax amount is over 50,000$ and you want to take the longer period for paying your tax, i.e. more than five years.
5. Counter offers in response to the tax lien:
By filing an offer in compromise, you can avoid your business from the tax lien. In such case, if your offer is being accepted, you can set your tax duty and has to pay less than the taxes obliged.
But this process is so lengthy. Moreover, there are fewer chances that the IRS will accept your offer and give a decision on your offer.
What if a tax lien is on a property?
The obvious and easy method to avoid it is that you have to pay the all due taxes if you own a property. The only way, property tax can be avoided is that if the taxpayer is insolvent. However, it is applicable in some rare cases.
You have to pay your all taxes in any case. Considering this, the important thing is to take some proactive steps for coping with this. In this case, you are entitled to a tax lien. First of all, check if the amount of the tax lien is correct or not.
Though it is not an easy job to get rid of tax lien, the tax help services from a professional firm may work for you in this regard. As it is not just a piece of paper, but a claim on your property which can also affect your business negatively!
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