What is a tax lien?
A tax lien is filed typically when the amount owed to the IRS exceeds $25,000.00 on all assets of a taxpayer. This includes home, car, payments from vendors as well as any future property they acquire.
This is different than a tax levy which is an actual seizure of your wages or seizing assets and bank accounts.
Bank Levy: once the IRS gets their money, they don’t give it back
Wage Garnishment: The IRS tells your employer to take money out of your check to give to them. It is supposed to be limited, but sometimes they take out too much. You might be able to get it reduced if you find a friendly IRS rep and can prove that you can’t pay certain expenses as a result of the garnishment (mortgage, utilities etc).
How to resolve levies and garnishments? To stop them from happening again, you’ll want to enter into a payment plan with the IRS.
Pitfalls of a Tax Lien:
- Credit Score decrease.
- Jeopardize a home sale or refinancing.
How to get a tax lien removed
- Pay it
- Offer in Compromise (if you qualify)
- Payment Plan (if you set up automatic payments from your bank account)