tax liens Flashcards
what is a tax lien
A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets.
How to get rid of a lien
either pay it or negotiate with the irs
How long does it take IRS to release lien
The IRS releases your lien within 30 days after you have paid your tax debt.
Discharge of property
A “discharge” removes the lien from specific property
Subordination
“Subordination” does not remove the lien, but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage.
withdrawal
A “withdrawal” removes the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property; however, you are still liable for the amount due
How a lien affects you
Lien attaches to all assets, negatively affects credit, all business property including accounts receivable, and will continue during bankruptcy.
Lien vs Levy
A lien is not a levy. A lien secures the government’s interest in your property when you don’t pay your tax debt. A levy actually takes the property to pay the tax debt.If you don’t pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell any type of real or personal property that you own or have an interest in.
what is the 45 day rule
In summary, IRC sections 6323(c) and (d) grant lenders priority over the federal tax lien to the extent the loan or purchase is made (a) within 45 days of the filing of the notice of federal tax lien or (b) before the lender had actual knowledge of the filing, whichever comes first (45 days from filing or actual knowledge).
first in time, first in right
The general rule for secured interests in property is “first in time, first in right”. The party that files a lien first has a right to the taxpayer’s property over those who file liens subsequently.
