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What are the options when facing a tax lien?

by | Mar 20, 2020 | Firm News

Perhaps few debts are scarier than a debt to the IRS. After completing their taxes, many in Michigan discover they owe the government more than they can pay. Failing to take the appropriate steps to secure a payment plan, they may find themselves facing a tax lien. What does this mean, and what are the options for dealing with this harsh step from the IRS?

If someone is past due on paying a tax debt, the IRS may place a claim on that person’s property. This means that homeowners with tax liens may be unable to sell their houses until they have cleared up the overdue debt. It may also lead to a tax levy, which is when the IRS acts on its claim to someone’s property, seizes it and auctions it to repay the debt.

Tax liens can include more than someone’s home. The IRS can place a lien on bank accounts, wages and other assets. Those who are unable to pay the overdue taxes may feel helpless, but the good news is that there are options to get out from under the government’s claim. It is possible to negotiate with the IRS to lower one’s tax bill or request a payment plan that fits into one’s budget. It is also possible that the IRS has made a mistake, and the taxpayer can appeal the lien.

Another option is to seek debt relief through bankruptcy. For many in Michigan, bankruptcy offers a fresh start by reducing or eliminating many qualifying debts. Before the situation with the IRS gets out of hand, it is wise for those who owe back taxes to speak with an attorney to discuss the alternatives that best match their circumstances.