The I.R.S. has two powerful collection tools that it uses to enforce collection of delinquent tax liabilities. These are liens and levies.
Liens occur when the I.R.S. takes a security interest in your property. Most of us are familiar with liens that a mortgagor will place on our property when we execute a mortgage to purchase that property. I.R.S. liens are similar in that they must be satisfied before clear title can be transferred to a buyer. In Florida liens are prioritized by filing date. This means that the first lien filed has priority over any subsequent liens that are filed. So, if your mortgage company files a lien prior to the I.R.S. filing its lien, your mortgage company’s lien has priority over the I.R.S. lien.
I.R.S. liens attach to any property you now own and any property you acquire in the future. The I.R.S. liens attach to all of your property, not just your real property.
I.R.S. levies occur when the I.R.S. takes possession for your property to satisfy your delinquent taxes. This most frequently occurs when the I.R.S. removes funds from your bank account. It also occurs when the I.R.S. takes title to your property in order to sell that property at auction. This is the most powerful weapon in the I.R.S. collection arsenal.
Both liens and levies require advance notice by the I.R.S., except in extraordinary circumstances. You have 30 days to appeal an I.R.S. proposed lien or levy from the date of the notice. You should almost always appeal a lien or levy. Many times we can work out a much more lenient solution when we appeal these actions.
The I.R.S. can also attack transfers that were at less than fair market value. Consequently, transfers to family members or friends may not serve to protect your property from the I.R.S.
If you receive a Notice of Intent to File a Tax Lien or a Notice of Intent to Levy from the I.R.S., please contact us for a consultation. We will evaluate your situation and determine what course of action is best for you. You may also post a question on our tax and accounting forum.