lien removal san diego

TAX CASE EVALUATION

IRS COLLECTIONS: EXPERT HELP FROM SAN DIEGO TAX ATTORNEYS

LIEN REMOVAL | IRS TAX NOTICE CP504B

Navigating threatening IRS notices can be intimidating. It is important to understand the significance and measures needed to effectively deal with a CP504B Notice. 

UNDERSTANDING IRS TAX NOTICE CP504B

The CP504B (Notice of Intent to Seize (Levy) Your Property) is a warning dispatched by the IRS to
business entities with tax delinquencies. CP504B alerts business entities that the IRS will seize property if their past due tax balance is not paid, which means IRS can seize your wages, bank accounts, business assets, personal assets (including your car and home), or social security benefits.

There are several reasons that can prompt the IRS to dispatch a CP504B notice:

  • Unanswered Previous Notices: Ignoring or neglecting earlier notices like the CP14 (a notice that you owe unpaid taxes) escalates to the issuance of the more assertive CP504B.
  • Delinquent Tax Payments: If IRS records indicate a considerable overdue amount for a corporation or business entity, they may issue a CP504B.
  • Lack of Communication: Not engaging in timely discussion with the IRS about outstanding amounts.

Though the CP504B notice sounds alarming, the IRS typically sends a Final Notice of Intent to Levy before initiating any levy actions. However, after sending out a CP504B notice, the IRS can immediately file a Notice of Federal Tax Lien. This public record lien is difficult to challenge unless you fully pay the tax.

How to Get a Tax Lien Removed

Federal tax liens make it extremely difficult to sell your property or secure lines of credits with financial institutions. They are intimidating if you’re unaware of the methods available to get them removed. Understanding how to address a tax lien can make the process manageable. Here are various approaches:

  1. Paying off the tax debt in full -The most straightforward way to remove a tax lien is to settle the tax debt entirely. Once the IRS receives your payment, they’ll release the tax lien, usually within 30 days.
  2. Setting up a payment plan – If you can’t pay the entire amount immediately, the IRS often allows taxpayers to set up a monthly installment agreement. Once agreed upon, it’s essential to remain consistent with payments to avoid further complications.
  3. Paying through an offer in compromise – An Offer in Compromise (OIC) allows taxpayers to settle their tax debt for less than the total amount owed. The IRS will consider an OIC based on your ability to pay, income, expenses, and asset equity to determine whether you qualify.
  4. Demonstrating financial hardship – In certain situations, demonstrating that the lien causes undue financial hardship can lead to its removal or a halt in IRS collection activities.
    1. Currently Not Collectible (CNC) status – If you can prove that paying the tax debt will cause significant hardship, the IRS might classify your account as “Currently Not Collectible.” While this halts collections, the lien may remain until you address the underlying debt.
    2. Bankruptcy considerations – In some instances, filing for bankruptcy might discharge certain tax debts and potentially lead to lien removal. However, bankruptcy is a complex process, and its relationship with tax liens can vary based on different factors.
  5. Challenging the tax assessment – Sometimes, the tax assessment that led to the lien might be faulty. In such cases, challenging the tax assessment may result in IRS removing the lien.
    1. Errors or discrepancies in the assessment – Review your tax assessment for mistakes or inconsistencies. If you find any, address them immediately with the IRS, as rectifying these can lead to lien removal.
    2. Statute of limitations on collection – The IRS has a 10-year window to collect outstanding taxes from the date of assessment. If this period expires and they haven’t collected, the lien may be released unless IRS does refile the Notice of Federal Tax Lien and extend it.
  6. Requesting a discharge of property – In specific scenarios, you can request the IRS to discharge a particular property from the lien, freeing it from the clutches of the lien.
    1. Sale of property to satisfy the lien – If you decide to sell a property subjected to a tax lien, the lien doesn’t disappear. However, the sale proceeds can be used to satisfy the tax debt, leading to the removal of the lien.
    2. Subordination of the lien – Though it doesn’t remove the lien, subordination allows other creditors to move ahead of the IRS, often facilitating loans or mortgages that might otherwise be impossible due to the lien.

Lien Release or Lien Withdrawal

After resolution of your tax liability, you will receive a lien release. Additionally, you may request a lien withdrawal:

  • Lien Release – IRS will issue a Certificate of Release of Federal Tax lien (Form 668(Z)). This declaration by the IRS demonstrates that you have fully satisfied your tax debt, and the lien no longer remains in effect. Though the record of the lien will still remain on your credit report, creditors will recognize the tax liability has been settled.
  • Lien Withdrawal – You may use Form 12277 to request a lien withdrawal. This withdrawal essentially removes any public evidence that the lien existed and results with an improved credit standing.

OUR EXPERT TAX LAWYERS KNOW HOW TO CHALLENGE IRS LIENS

The tax lawyers of Dallo Law Group are trained and educated in the lien process. We understand the types of property that are exempted from the lien and can prevent the IRS from putting a hold on your livelihood. We have the experience to work with the IRS to diminish the impact, effect, and scope of your lien so that you can secure financing for your business needs. If IRS is being overly aggressive and uncooperative, our tax attorneys can demand a collection due process hearing (CDP), and we will use our expert legal and negotiation skills to achieve the best results for you!

***IMPORTANT NOTE*** There is a big difference between a lien and a levy. While a lien limits a taxpayer’s capacity to sell property or secure financing, a levy is a collection activity of the IRS to collect back taxed that are owed. For more information on the levy process and to learn how Dallo Law Group can help with your situation, please contact our team today!

Written By: Patrick Nguyen