Tax Lein Removal

by Louis Meeks on November 26, 2014 in Blog

FEDERAL TAX LIEN REMOVAL

A federal tax lien is the government’s legal claim against your property when you have a tax debt.  When the IRS liens your property, it files a public document to alert creditors that the government has a legal right to your property.

Once a federal tax lien is place on your property, it affects your ability to sell or otherwise negotiate that property without the IRS’ input.  For example, any proceeds from the sale of real estate would be subject to a claim by the IRS to the extent of the lien amount.  Even if you were attempting to refinance your home, and were not even trying to get any cash out of the transaction, a tax lien could prevent this from happening.

Another downside of a federal tax lien is that it can have a negative effect on your credit score.  Since the tax lien evidences a debt that the taxpayer has failed to pay, it signals a possible payer issue.  Also, the tax lien evidences a debt that can exist, depending on the expiration date, for up to ten years, with an agency that very often is aggressive in collecting on that debt.

Given the problems that a tax lien can create, it is important to get that lien removed whenever you can.  There are a few ways this can be accomplished.  First, if the lien was filed prematurely, or if it was applied incorrectly or not in compliance with IRS procedures, you are entitled to withdrawal of the lien.

Obviously, if you pay the tax debt in full, then the lien is released.  However, this does not automatically mean that the notice of lien gets withdrawn.  The only way to ensure that the lien gets withdrawn is to file an Application of Withdrawal of the Notice of Federal Tax Lien.

If you are in the process of repaying your tax debt, you do not necessarily have to wait until the debt is paid in full to get the lien removed.  If you are in a monthly installment agreement for the full amount of your tax debt, the debt is $25,000.00 or less, you are in compliance with all of your tax filings and payments, you have no prior defaults on any agreements, and you have made 3 or more consecutive debit payments, then you are eligible to file the Application of Withdrawal of the Notice of Federal Tax Lien.

Victory Tax Solutions is ready to help you with your federal tax lien issue.  Contact us today to discuss how we can put our experienced and knowledgeable staff to work on your case, and set you on the path to Victory!

Please feel free to call us at any time.  Our toll free number is 877-772-0123.

©2014 VictoryTaxSolutions.com
Publishing Rights: You may republish this article in your web site, newsletter, or ebook, on the condition that you agree to leave the article, author’s signature, and all links completely intact.

Lock In Letters

by Louis Meeks on November 26, 2014 in Blog

Lock In Letters

A “lock-in letter” is a special order whereby the IRS or another revenue agency orders an employer to withhold taxes from an employee’s wages at a required minimum rate.  Although lock-in letters can be appealed, once they take effect, they can be very difficult to reverse.

Any individual hired by a U.S. company to work in the United States as an employee is given the option to withhold taxes at a certain rate from their wages.  When the employer withholds those wages and submits them to the IRS, the employee has made a payment of taxes that will be due on that year’s tax returns.

The form upon which tax withholdings are set is called a W-4, and it is typically filled out by every employee who works for wages.

There are two determinations an employee must make when deciding how much wages to withhold to taxes.  The first is whether the employee will file taxes as “single” or “married.”  Single withholds taxes from the wages at a higher rate than married.  The other determination is the number of exemptions.  The lower the number, the higher the withholdings.  To say a taxpayer is withholding at Single 0 is to say the employee is withholding at the maximum rate which taxes are withheld from wages.

When a wage earner accumulates multiple years of tax debt as a result of under-withholding taxes, the IRS or other taxing agency may issue a “lock-in letter” to the employer instructing them to withhold taxes at a minimum rate on future paychecks.  This rate is usually set by the IRS at Single 0, resulting in the employee withholding sufficient taxes (in most cases) to satisfy their tax liability.

However, some taxpayers prefer not to be locked in at Single 0.  When that is the case, appeals of a lock-in letter are possible.  In many cases, a lock-in letter can be successfully appealed to allow withholdings at the appropriate rate to reflect the employee’s tax return.

For example, presume an employer receives a lock-in letter for a certain employee.  This particular employee is married and files a joint tax return with a spouse who does not work.  They claim two dependent children on the tax return as well.  Although the IRS will try to lock in the employee at Single 0, the employee will typically be allowed to withhold at a lower rate of Married 4.

Appeals of lock-in letters are time-sensitive, so if you receive a lock-in letter, call a tax professional as quickly as possible to help appeal and to ensure your tax withholdings will be appropriate going forward.

Please feel free to call us at any time.  Our toll free number is 877-772-0123.

©2014VictoryTaxSolutions.com
Publishing Rights: You may republish this article in your web site, newsletter, or ebook, on the condition that you agree to leave the article, author’s signature, and all links completely intact.