Tax Lien

A tax lien is the government’s legal claim against property that you own when you fail to pay off a tax issue. The tax lien works in favor of the government to protect their interest in your property. This includes real estate, personal property, and all of your financial assets. It mostly comes into effect at the time of sale of real property.

The California tax lien is applicable to all taxpayers in the state in the event of tax issues. The state tax lien is enforced on all property and rights to property of a taxpayer. The Notice of State Tax Lien is usually stated in the taxpayer’s credit report as it is a matter of public record.

The best way to avoid a tax lien is to simply file and pay all of your taxes with proper tax preparation in full by the due date. Victory Tax Lawyers will make sure you file your taxes on time in order to avoid any hassles with the IRS. We consider all of the payment options provided by the IRS to tailor to your unique situation in order to help settle any outstanding tax issues you owe the federal government.

Your first step to confirm whether or not you have a tax lien is by contacting the IRS Centralized Lien Unit at (800) 913-6050. If no lien has been placed yet, but you suspect it may be impending, look up your current balance on the IRS website and pay it off. Another method to check the status of any “lien filings” against you is by searching your secretary of state’s website. Additional legal databases can also provide you with this information for a fee. However, the IRS isn’t the only government agency with the power to place a lien on your property. If you don’t pay your local taxes on time, you also run the risk of the state placing a lien on your home or other property. The county will be able to confirm whether or not a lien was placed on your home. From there, you’ll need to get in touch with the state government in order to begin paying off your back taxes. The state of California offers a number of payment options, including a payment plan for a $34 fee. Upon your state tax liability being paid off, the lien can be lifted.

Victory Tax Lawyers can help you get rid of an IRS tax lien in the fastest and least complicated way possible. One of the obvious ways is by simply paying off any tax issue you owe. We will help figure out the amount you owe to the IRS in order to not have to deal with a tax lien later. However, if you are forced to deal with an ongoing tax lien, once you have cleared all tax-related problems, within 30 days the IRS will withdraw the tax lien.

When our clients are not eligible to remove their ongoing tax liens, we offer them the choice of opting for Subordination. This makes it easier for the taxpayer to get a loan, a mortgage, or refinance. Please reach out to Victory Tax Lawyers to ask any one of our knowledgeable tax lawyers for a free consultation to confirm your eligibility for subordination. We follow the rules of IRS Publication 784 to guide you correctly. You can also check this video for more information regarding subordination.

If you wish to wipe off a tax lien from a specific property, our tax experts can help you apply for a discharge. We will analyze your eligibility based on the different types of Internal Revenue Code provisions you qualify for according to the IRS Publication 783. You can take a look at this video for more information as well.

A tax lien from the IRS can impact an individual in various ways, including:

Different Types of Auctions

There are primarily two types of tax lien auctions:

It’s crucial to familiarize oneself with the auction process before participating. This involves:

Tax lien auctions can occur in-person or online, depending on the jurisdiction’s preferences. Numerous counties have migrated their tax lien sales to online platforms to enhance accessibility and efficiency, while some still adhere to traditional in-person auctions.

Risk Assessment

It’s imperative to manage finances adeptly by setting a maximum bid amount for each property to avoid overcommitting and ensuring a diversification of investments to spread risk.

In essence, a tax lien certificate is a claim against a property for unpaid property taxes. When a property owner defaults on their tax payments, the government can impose a lien on the property. To recover the owed tax amount, the government can then sell a tax lien certificate to investors. This offers a double-edged opportunity: municipalities recover vital funds, while investors acquire a potentially lucrative investment.

Investment Mechanism

Investing in tax lien certificates primarily means purchasing the right to collect on the property owner’s debt, alongside an interest. If the property owner redeems the lien (pays the owed amount plus interest), the investor reaps financial benefits. If not, the investor may potentially foreclose on the property.

The investment in tax lien certificates introduces a balancing act between risk and reward. While promising in terms of potentially high-interest rates and opportunities to acquire property below market value, it also holds risks such as property depreciation, legal complications, and redemption failures.

Navigating the legal framework of tax lien certificates demands a keen understanding of local, state, and federal laws.

The rules governing tax lien certificates vary significantly across different jurisdictions. Different states and even counties may have disparate regulations concerning interest rates, redemption periods, and foreclosure processes.

The redemption period is a crucial time frame in which the property owner can repay the owed tax amount plus interest to retain their property. Understanding the length and legal implications of the redemption period is pivotal for strategic investment planning.

Comprehensive research, particularly in the realm of property tax lien sales, emerges as an indispensable component in ensuring astute investment decisions by meticulously evaluating the property’s condition, location, market value, and potential legal intricacies. The practice of thorough examination is interwoven with effective financial planning, wherein the establishment of a clear budget and adept financial management prevails as paramount to eschew over-expenditure and facilitate a diverse investment portfolio, thereby mitigating associated risks. Furthermore, intertwining these pragmatic approaches with ethical considerations warrants investors to embody a notable degree of ethical responsibility. This entails striking a harmonious balance between financial pursuits and exhibiting compassion and understanding towards distressed property owners, thus paving the way for investing strategies that are not only financially sound but also ethically sustainable and socially responsible.

The relationship between tax liens and credit scores is complex, possessing the ability to redefine an individual’s financial trajectory by affecting borrowing capabilities and credibility in the financial marketplace.

Until 2018, tax liens were a conspicuous part of credit reports, directly influencing credit scores. Their presence signified a high-risk borrower, naturally plummeting credit scores, and making favorable borrowing terms an unlikely reality.

Even though tax liens have been removed from credit reports since 2018, their impact persists in a more clandestine manner. The unpaid taxes, which fostered the lien, may manifest as unpaid debts on credit reports, thereby indirectly impacting credit scores.

Navigating through the financial waters post-tax lien involves strategic financial management and dedicated credit rebuilding efforts.

Redemption Period

Despite its absence on the credit report, addressing the tax lien is crucial, involving settling tax debts or establishing a payment plan with the relevant tax authority.

Engaging in practices that bolster creditworthiness, such as timely payments, reducing outstanding debts, and judiciously managing credit cards pave the way for credit score recuperation.

Obtaining loans or additional credit lines might become a convoluted process, as lenders who perform a thorough financial check might unearth the existence of a tax lien, thereby affecting lending decisions.

Contrary to popular belief, a tax lien and tax levy are not the same. A lien secures the government’s interests in your property whenever you fail to pay your taxes on time. A levy allows the IRS the power to seize or garnish your most valuable property in order to satisfy your outstanding tax issues. This is why at Victory Tax Lawyers, we encourage our clients to at least arrange to pay the taxes in installments if they are not in a financial position to pay it all at once.

It’s never a good idea to ignore the IRS or choose not to pay off your tax problems. This negligence could lead to your property, vehicles, money, and other assets being seized and auctioned off in tax lien sales, especially once the IRS obtains a lien certificate – an official claim against your property.

If you pay off your tax issue after your property has been seized, Victory Tax Lawyers will fight for you to get back what is rightfully yours through a release of lien form, also known as Form 14134. This may sometimes fall under the conditional release if you have already paid back everything you owe to the IRS.

Victory Tax Lawyers work with the IRS in many ways to help our clients pay off their tax issues. Filing for taxes is a complex process. It is always better to let our tax attorneys handle the process and guide you to the appropriate options.