What is a Tax Lien? Everything You Need to Know

A tax lien can be a massive financial obstacle for individuals and property owners. It is crucial to understand what a tax lien is and how it impacts your financial standing. A tax lien is a legal claim by the government against your property when you fail to pay a tax debt, affecting your ability to sell or refinance your property.

This guide will walk you through the essential information about tax liens, how to determine if you have one, and the steps to take if you are facing a lien. We’ll even provide tips on preventing future tax liens. At Lothamer Tax Resolution, we help you navigate these complex issues and find practical solutions. A clear understanding of what a tax lien is and addressing it quickly can stop the problem from worsening rapidly. Let’s get into it.

A Closer Look At Tax Liens

In short, a tax lien is a claim by the government legally placed against the property you own due to unpaid tax debts. When you owe taxes and fail to pay, the IRS or state tax authority can put a lien on your assets, including real estate, personal property, and financial accounts. This lien serves as a security for the tax debt, giving the government a legal right to your property until the debt is satisfied.

There are several types of tax liens, including local, state, and federal. On the other hand, a tax lien certificate is a document issued by the government when a property owner fails to pay their taxes. Investors can purchase these certificates at a tax lien auction, effectively paying the delinquent taxes on behalf of the property owner. The investor then earns interest on the amount paid, and if the owner fails to repay the debt, the investor may ultimately foreclose on the property.

Find Out If You Have a Tax Lien

Learning about tax liens on your property is essential for resolving the issue before the sale or purchase and before penalties become worse. There is no single source for lien information, but here are some good starting points for your investigation.

1. Public Records: Tax liens are public records, and you can search for them through your local county recorder or clerk’s office. Many counties offer online databases where you can search by your name or property address to see if any liens are filed against you.
2. Tax Authorities: The IRS and state tax authorities maintain records of tax liens. You can contact the IRS directly to inquire about any federal tax liens. Similarly, state tax departments can provide information on state tax liens. Be prepared to provide your personal information and details about your property.
3. Use Online Resources: Several websites offer services to check for tax liens. These services aggregate public records and can provide a comprehensive report on any liens filed against you. While some of these services may charge a fee, they can save time and provide detailed information.
4. Check Your Credit Report: Tax liens can appear on your credit report, affecting your credit score. Request a copy of your credit report from the major credit bureaus (Equifax, Experian, and TransUnion) to see if any liens are listed.
5. Consult a Tax Professional: If you are unsure about the status of a tax lien or need assistance in checking for liens, a tax professional or attorney can provide guidance and support. They can also help interpret the information and advise on the next steps.

Steps to Take If You’re Facing a Tax Lien

If you face a tax lien, you must act fast to minimize the potential adverse effects on you and your assets. First, immediately contact a tax professional like Lothamer Tax Resolution, who can guide you through the process and negotiate with tax authorities on your behalf. In some cases, this can be the make-or-break factor for your case.

Next, obtain a detailed account of your tax debt from the IRS or state tax authority. Understanding the exact amount owed and any accrued penalties or interest is essential for resolving the lien. If you can’t pay all at once, most situations will allow the IRS and state authorities to offer payment plans. This can prevent additional action while you settle your debt.

Another option if you can’t pay all at once is called an Offer in Compromise, which allows you to settle your taxes for less than you owe. This option requires a detailed financial breakdown and approval from the governing tax authority.

Finally, if you believe the lien was ultimately issued in error, you can file an appeal with the IRS or state tax authority. A tax professional can also assist with preparing and submitting the necessary documentation for this process.

Preventing Future Issues

Preventing future tax liens involves maintaining diligent tax practices and complying with tax obligations.

• File your tax returns on time, even if you cannot pay the total amount owed. Filing on time helps you avoid additional penalties and interest.
• Pay your taxes by the due date to prevent accrual of penalties and interest.
• Regularly review your financial situation to ensure that you have sufficient funds to cover your tax obligations.
• Consult with a tax professional or accountant for complex tax situations or if you anticipate difficulties in meeting your tax obligations. Professional advice can help you navigate the tax system and avoid pitfalls.

Navigating Tax Liens with Lothamer

At Lothamer Tax Resolution, we are dedicated to helping you navigate the complexities of tax liens, providing expert guidance and effective solutions. Whether you need assistance with resolving a current tax lien, setting up a payment plan, or preventing future issues, our team is here to support you every step of the way. Trust Lothamer to help you achieve financial stability and peace of mind.

Let Lothamer Be Your Tax Lien Expert

Our experienced team is ready to provide the support and expertise you need to resolve your tax problems effectively. Don’t let tax liens disrupt your financial stability when we can provide reliable, comprehensive tax resolution services. Contact us here, or call us at 877-955-9020 to schedule your consultation.