Korntved & Associates
Your Place For Solutions To Tax Problems.
Dealing With Collections - Lien/Levy Issues and Prior
Rejections.
· Liens.
Liens are ONLY relevant for two purposes. First, they cause bad credit. Second, they give tax agencies priority in disposition on personal and real property. Disposition is sale, abandonment or seizure.
Liens are the same as mortgages and other secured loans. The order that liens are placed in determines who gets paid in disposition. Liens are paid, in order, to the extent cash is available. If a lien is fourth in order and cash is only available for the first three liens then the fourth lien is not paid.
Some State agencies file liens which automatically causes an extension of the collection statute. The Internal Revenue Service DOES NOT HAVE this option.
There is usually no way to get rid of tax liens up front because it is the most passive step in collections. So tax agencies are given wide latitude because of it.
Tax liens are removed by law within 30 days of the date the tax is paid.
· Levy And Seizure.
Seizure of real estate requires a court order. This rarely occurs and usually only in criminal cases.
Levies are very common in collections. Collections will generally stop an existing levy when an offer is submitted. It is against the law to make any NEW levies once a settlement reaches a certain stage. Therefore, if a levy is not in place at settlement time there is no need to worry about one.
The Internal Revenue Service is NOT stopping any existing levies before or during an offer these days. They are the ONLY agency that currently does not want to stop an existing levy. They must not make any new ones in settlement but they have carte blanche in collections before settlement so taxpayers MUST hurry to settlement if the Internal Revenue Service is after them.
· Prior Rejected Offers.
All agencies MAKE taxpayers deal with collections after a settlement offer is rejected. Taxpayers are no longer allowed to just resubmit another offer. Collections will always try to get people on payment plans if an offer was rejected. They will always have more leverage to force taxpayers into unrealistic payment plans because they know an offer was rejected. These situations can be very emotional BUT they must be dealt with.
NEVER get weak knees at this stage because once collections is dealt with another offer can be submitted. Tax agencies tend to work out offers more each round/loop. The weakest knees lose here – agency or taxpayer.
The simple fact is that an offer may take one or two or
even three loops but it gets done at some point. Any settlement, regardless of
the loop it is settled in, is ALMOST ALWAYS better than any payment plan
through collections.