Government Tax Lien: What Everyone Needs To Know
The government has armed itself with many ways to recover tax dues from payment defaulters. Government tax lien is one of these ways. During recent times government tax lien has been effectively used by the federal as well as state and county governments to bridge the tax deficit which arises due to the failure of people to pay their taxes either deliberately or because of genuine problems.
The process according to which a government tax lien can be imposed is somewhat tricky and complicated, and there are some ways to save yourself from the tax problem that arises due to federal tax liens. There is no regular period for the lapse of payment after which the government tax lien can arise. Some states serve tax lien within the very first year of the error of payments. In some other countries, the taxes and penalties may be accrued for years before claim raises its ugly head.
Even when the government resorts to an imposition of the lien, the process is lengthy. First of all the government tax lien cannot arise until proper tax assessment is made. The tax defaulter has to be appropriately notified and furnished with a bill having details of his remaining tax liabilities. It is only after a sufficient period has passed after the notification that the person can be served a tax lien. The IRS allows a time gap of 10 days between the furnishing of tax notification and serving of the government tax lien.
Once the government tax lien is imposed, proper public notification is given. It signifies to the creditors of the said taxpayer that entire property of the individual is now lien to the government authorities. The immediate result of government tax lien is that the economic mobility of the said property gets severely restricted. Sale of the said property and mortgaging become ridiculously tricky.
The credit ratings of the individuals fall face first, and it becomes the great pain for him to take any new loans or credit cards. Purchase of any new property also becomes a ridiculously complicated affair. This means that government tax lien does everything short of leaving him financially broke.
But then, Uncle Sam is not so sorry after all. You can appeal against the lien if you think that there is something wrong with the tax assessment or the imposition of the claim. The most common reason where an appeal can be made against a government tax lien is any procedural fallacy in the tax assessment or serving of claim. If the call is held valid, the lien gets lifted. If the request is dismissed, the property is put up for tax sales.
Government tax lien may look like a fierce monster, but it can be easily tamed with proper tax lien information.