TAX LIEN REMOVAL AND AVOIDANCE
A Tax Lien can severely impact your business’s financial health by lowering your credit score, preventing you from buying or selling business property, and it could prevent you from securing business loans. At Spaulding Legal, APC we have experience dealing with tax liens and can provide a customized strategy to remove or avoid them altogether. Despite having the knowledge and experience necessary to address tax liens you should keep in mind that tax lien removal or avoidance is not always possible (at least immediately). Nevertheless, it is important to consult with a licensed attorney to understand and protect your rights as a taxpayer. Otherwise, you may be taken advantage of or given faulty advice by the IRS or other taxing authority, which could lead to a tax lien being filed unnecessarily (this happens far too often).
UNDERSTANDING TAX LIENS
Many times clients mistake liens for levies and vice versa. However, it is important to understand the difference. A lien is filed at the county recorder’s office where your business operates. While a levy is issued to a third party that has control of your property (bank, trustee, etc.) and requires the third party to turn over property (usually money) to the IRS (or other tax agency). If you have received a Notice of Federal Tax Lien (or State Tax Lien), it does not mean anything has been taken from you. Instead, the filing of a tax lien puts the public on notice that your business’s property is encumbered. By providing record notice to the public, the tax agency can become a priority creditor, which means if you were forced to liquidate your assets it would be among the first to get paid. By understanding how, why, and when a tax lien is filed, Spaulding Legal, APC can provide a customized strategy to help avoid or remove tax liens when possible. Additionally, we will ensure you understand your rights as a taxpayer so you can make an informed decision on how to proceed.
DISCHARGING PROPERTY FROM A TAX LIEN
A tax lien attaches to all property your business owns. However, in some instances, you may be able to discharge a specific piece of property from the tax lien. The need to discharge property from a tax lien arises when a business wants to sell property. The IRS will usually discharge your tax lien under the following circumstances:
- Value of property remaining attached by the lien(s) is at least double the liability of the federal tax lien(s) plus other encumbrances senior to the lien(s)
- The United States receives an amount not less than the value of the United States’ interest.
- The interest of the United States in the property to be discharged has no value.
- Proceeds from property sale held in escrow subject to the liens and claims of the United States.
- Deposit made or bond furnished in an amount equal to the value of the United States’ interest.
Whether you have a federal or state tax lien, Spaulding Legal, APC has the experience necessary to analyze whether your property can be discharged from the tax lien. We take the time to understand your specific situation and then develop a personalized strategy to meet your needs.
If you have been unable to refinance a business loan because of a current federal or state tax lien, there may be a solution available. In certain circumstances, the IRS and state may subordinate their lien. You will need to show the IRS or state that subordinating the lien is in their best interest. For example, if you can access equity in business property or refinance a current loan to free up cash each month the IRS may be willing to subordinate the lien. This is usually preferable to leaving the lien in place because it will allow you to start repairing your business’s credit and focus on making the business successful again. Whether you have a federal or state tax lien, Spaulding Legal, APC has the experience necessary to analyze whether lien subordination is possible. We take the time to understand your specific situation and then develop a personalized strategy to meet your needs.