What is a Tax Lien?

Nashua Resident Looks for Help

When an individual or business has failed to pay taxes that are owed, the federal or state government can place a lien on their property and other assets.  This lien can be removed if the parties are able to come to a payment agreement to settle the back taxes.  If no agreement is made and there is no repayment, the property can be seized with the option to sell it at auction to pay the back taxes.

A Nashua resident was concerned about unpaid taxes, which totaled a significant amount.  Looking for options, he contacted Merrimack Tax Associates for help.

The Tax Lien Process

When back taxes are owed, the taxpayer will receive a letter and demand for payment.  The total amount owed will be detailed in the letter.  If the amount continues to go unpaid, a lien can be placed on any property belonging to the debtor.  This includes a home, vehicles and any assets.  This lien is also effective for any new assets acquired while the lien is in place.  For businesses, a lien can be placed against property and accounts receivable.  Even if the taxpayer files for bankruptcy, if the lien is against a federal tax debt this can still remain in effect.

Getting Out of a Tax Lien

The easiest way to remove a tax lien is to pay the back taxes that are owed.  If the amount cannot be paid in fully immediately, payments can be negotiated with the IRS.  This can be in the form of an automatic withdrawal by the IRS each month until the debt is paid in full.  It is important to hire a professional to help you through the process of negotiating with the IRS and releasing the lien on your property.  Even after the lien has been removed, this will remain on your credit report for up to ten years.

Merrimack Tax Associates was able to work with the IRS to establish payment terms for the Nashua resident, eliminating the need for a tax lien to be issued on his property.

Sit down with one of Merrimack Tax Associates’ professionals to discuss any problem you might have with your tax situation. Call today (603) 429-2009 on contact us here.