1. The IRS must withdraw a tax lien under circumstances that are broadly defined. Code §6323(j). Withdrawing the lien means that the lien is removed from public record as well as all three credit reports.
2. The IRS must release the lien under specific circumstances. Code §6325(a). For example, if the lien is paid in full or if you negotiate a settlement of the tax liability.
3. The IRS must give you a partial release of the lien under certain circumstances. It’s called a “discharge” of the lien and it means that specific property is no longer encumbered by the lien. You can sell it or borrow against it. Code §6325(b).
4. The IRS can’t keep a lien on your property forever. IRS tax liens have a limited shelf life. Code §6325(e). On the face of the lien, you can determine when the lien expires.
5. The IRS must subordinate the lien under specific circumstances. Code §6325(d). For example, you obtain financing with a lender who steps ahead of the IRS at closing, and some settlement or payoff of the tax liability is negotiated.
6. The IRS can’t lien what you don’t have. A discharge of real estate means that the federal tax lien is removed from that piece of property only. The Internal Revenue Code provides that the IRS may issue a certificate of discharge of your property from the federal tax lien if the property has no equity or value. Code §6525(b)(2)(B).
7. The IRS must consider settling your tax debt. Code §7502. Although strict guidelines exist, driving this point home with a settlement officer or appeals officer has worked wonders in hammering out a deal for my client.
8. The IRS must accept a partial payment plan under certain circumstances. The law does not require citizens to pay the IRS in full. Code §6159(a). Partial payment plans have proven a lifesaver for many of my clients.
9. The IRS can’t collect tax forever. The time to collect begins when the IRS first puts a balance due on its books and ends 10 years later on the collection statute expiration date. Code §6502.
10. The IRS must give a 30-day notice before taking your property. They also must give you a right to appeal. Code §6330 and §6331(d) regarding levy; and Code §6320(c) regarding liens.
11 The IRS must obey the no equity rule to seize a home. The IRS cannot seize your property unless it results in the recovery of money for the government. For example, if you have a car worth $10,000 and it has a $10,000 loan on it, the IRS can’t take it. The same applies to your house if there is little or no equity; they must leave it alone. Code §6331(f) and §6331(j)(2)(c).
12. The IRS can’t just show up and take your house. The IRS must file a foreclosure lawsuit. The lawsuit must be approved by a Federal District Court, which must also approve the sale. Code §6334(e).
13. The IRS can’t take your household property except in very rare circumstances. Code §6334(a). Revenue Officers make threats to intimidate folks, but they can’t do a lot of what they threaten – it’s the law.
14. The IRS must release a levy if: [a] you enter into a payment plan, or [b] if it’s causing economic hardship. Code §6343. The law protects you against ongoing and continuous IRS levies. In fact, an immediate release of the levy can be negotiated even if you can’t pay the tax. Code §6159(a). Remember: a levy is different from a lien. A levy is where the IRS takes your wages, or bank account, or other property and uses the proceeds to pay the tax liability.
15. The IRS does not have the final say. Almost all IRS decisions are subject to appeal and review by an independent IRS Appeals Officer. For example, if the IRS rejects your settlement offer, Code §7122(e) gives you the right to appeal. In most appeals, I obtain a favorable result for my client.
If you have a problem with the IRS call Faith Firm at 414 771-9200.
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