Fixing Your Tax Problems to Repair Your Credit: What You Need To Know

August 16, 2013 by

“They say love makes the world go round, but that’s not true,” Sal M., who lives in Spencer, MA, said. “It’s money – or more correctly, credit! – that matters. If you don’t have good credit, you can’t do anything in this world. You can’t buy a house, you can’t start a business, you can’t go to school – I can’t even get a car that runs halfway decent because my credit’s all screwed up!”

Tax Liens Can Hurt Your Credit

Many people don’t realize that their tax problems can hurt their credit. When you owe money to the IRS or MA DOR (or both!), and you don’t pay your tax debt, you can wind up with tax liens. Tax liens are public record, which means anyone can find out about them. All of the credit rating agencies use tax lien information against you when determining your credit score.

A good credit score is, as Sal discovered, essential to the way we live our lives today. Even the US Government seems to have figured that out. That’s why there are special incentive programs in place to encourage delinquent taxpayers to resolve their tax issues and repair their credit.

Don’t Try To Fix Your Tax Problems On Your Own!

Working with a skilled, experienced firm that specializes in solving tax problems gives you the widest range of options when it comes to having your tax liens released or withdrawn. The IRS and MA DOR are not in the business of advising tax payers how to best solve their tax problems and restore their credit – they’re focused on collecting the maximum amount they can from you.

You May Qualify for a Fresh Start to Fix Your Credit

The Fresh Start Initiative allows delinquent tax payers who meet specific qualifications to take steps to repair their credit. If you owe the IRS less than $25,000 and can comply with a direct debit payment plan, after you’ve made 3 payments, you can request a lien withdrawal from the IRS.

This is only one of the ways you may qualify for the Fresh Start Initiative. Your experienced tax problem solver will fill you in on other available options to obtain a lien withdrawal. All tax lien withdrawals have a very positive impact on your credit rating. Be aware that you’re required to remain in full compliance with the tax laws going forward, and it’s an opportunity that’s only available once.

Is the Fresh Start Initiative right for you? The best way to get an answer to that question is to consult with an experienced tax professional. Schedule your free, no-obligation consultation today to discover how you can fix your credit and get your life back on track!

 

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Solving Your Tax Problems: Confirming A Tax Lien Has Been Released

August 9, 2013 by

The news that a Braintree lawyer has gotten into trouble for filing false and fraudulent tax lien releases has raised concerns for some Massachusetts residents who have or have had tax problems with the Massachusetts Department of Revenue or the IRS.

“I’d hate to think we went through all the work of having our tax problems resolved only to discover it was a scam,” said John M., who lives in Framingham. “If someone tells you that they’ve fixed your tax problem, how can you check to make sure they’re telling the truth?”

Experience Matters: Find the Right Professional To Solve Your Tax Problems

There are only three groups of people who are legally allowed to talk to the IRS or MA DOR on your behalf in order to fix your tax problems: Certified Public Accountants (CPA), Attorneys, and Enrolled Agents (EA). These professionals have to be licensed. If someone tells you that they can fix your tax problems, and they’re not a CPA, Attorney, or EA, run – don’t walk! – away. Make sure that anyone you hire to help you fix your tax problems is licensed.

Next, make sure that the person you hire to fix your tax problems is experienced in resolving IRS and MA DOR tax problems. Having a federal tax lien released or withdrawn is not an easy process. The same thing is true for state tax liens. Someone who’s brand new to the tax world may have the best intentions – they really want to help you out! – but if everything’s not done properly, it’s you that winds up in hot water with the IRS or MA DOR.  

Be aware that not all CPAs, EAs, or attorneys are familiar with tax problems. You want to choose a tax professional who specializes exclusively in solving tax problems. Choose a tax professional who has a proven track record of getting the job done right.

Your Tax Problems Solved: Making Sure A Tax Lien Has Been Released or Withdrawn

If the IRS has placed a tax lien on your property, it’s very difficult to sell and your credit takes a major hit.  If you’ve hired someone to solve your tax problems, and you want to make sure that they’ve actually had your tax lien released or withdrawn, there are steps you can take to double-check their work.

Contact the tax authority – either the IRS  or MA DOR – and, using your Social Security number or Federal Employer ID number, request a literal transcript. This transcript will show all of the official activity on your account, including when the lien was issued and when it was released or withdrawn.

Be aware that it can take some time for a tax lien release or withdrawal to appear on your transcript.  If you don’t see the lien release or withdrawal on your transcript, ask your tax professional for a copy of the release or withdrawal. On the release or withdrawal, you’ll find the identifying information of the official who issued the release or withdrawal. On a federal release or withdrawal, you will see the IRS employee’s name and badge number, as well as the location it was filed and recorded. On a MA DOR  release, you will see the employee’s name and Registry of Deeds where it was filed and recorded. You can call the IRS or MA DOR directly to confirm that the lien release or withdrawal has, in fact, been issued in accordance with what you’ve been told.

Don’t Be Afraid To Double-Check!

You know how stressful it can be to have tax problems. The collection letters, the calls or visits to your home or workplace, the constant wait for the bad situation to get even worse…these things all add up. That’s why people get help to solve their tax problems.

Enjoy the peace of mind that comes with resolving your tax problems. Don’t be afraid to double-check  your professional’s work. You’re entitled to this information, and the tax authorities will give it to you. 

Getting a tax lien released or withdrawn allows you to sell your property and repair your credit.  These are important considerations in getting your life back on track. If you need more information about getting a tax lien released or withdrawn, give us a call. We’ll be glad to help!

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Massachusetts Property Owners: Tax Liens Can Keep You From Selling Your Property

July 24, 2013 by

“I don’t want to go into details, but for a number of reasons, our financial situation had really gotten out of hand,” Megan R., who lives outside of Worcester said. “There were some medical expenses; my husband’s start up never actually succeeded…we needed a lot of money, and we needed it fast. The real estate market is finally picking up, so I took a deep breath and said, ‘Honey, I think it’s time we sell the house.’”

Megan sighed. “That’s when my husband looked at me and said, “We can’t sell the house.”  Megan had little suspected that her husband was keeping a big secret from her: the couple owed the IRS nearly $100,000 in back taxes. The situation was so dire that the IRS had placed a lien on their home. “Until that lien was taken care of,” Megan said, “we couldn’t sell the house!”

What Is A Tax Lien?

The IRS and Massachusetts Department of Revenue are in the business of making sure you pay your tax debt. If you don’t, they have a number of harsh and effective tools to use to force you to pay up. A tax lien is one of those tools. Basically, a tax lien is a written legal claim against your property notifying the public that you owe a tax authority – either the IRS or the Massachusetts Department of Revenue – some taxes that you haven’t yet paid.

A tax lien attaches to your property and clouds the title. Until your tax issue is resolved, no one can buy the property without the lien attached. Any time a potential buyer does a title search – a basic part of the home buying process, and one that all mortgage companies insist on – the lien is revealed. Buying the property means buying the tax debt – and that’s something very few home buyers (and no mortgage companies!) are willing to do.

What Can Be Done About A Tax Lien?

There is a lot of misinformation floating around on the internet about the best way to handle a tax lien on your property. The truth is that every tax problem is unique, and there’s no one-size fits all solution.

Your best choice is to connect with a CPA who works solely on solving tax problems for expert advice and guidance. Don’t try to face the IRS on your own. A knowledgeable Massachusetts tax expert can work with the IRS or Massachusetts Department of Revenue to find a solution to your tax problem.

 It may even be possible to reduce the total amount of tax you need to pay through a mechanism known as an Offer in Compromise.  When you’ve paid off this reduced debt, the IRS will release the lien, and then you’re free to sell the property.

Don’t give up hope! Every tax problem has a solution.  But you have to take action! Tax liens don’t go away on their own.  If you’re ready to get your life back, and be able to sell your property the way you want to, your tax situation needs to be addressed.  The time is now!

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How to Avoid The Filing of An IRS Federal Tax Lien

July 19, 2011 by

By Matthew J. Previte CPA MST
www.taxproblemsrus.com
July 20, 2011

Federal tax liens filed by the IRS for unpaid back taxes can cause serious damage to many areas of your life. IRS tax liens can not only ruin your credit rating but also cause problems with employers. Companies often pass up on hiring an otherwise qualified candidate because of IRS tax liens on the candidate’s credit report. Employers in some industries, (banking, finance, legal, accounting, law enforcement, or government agencies requiring security clearances) often have to terminate employees due to IRS tax problems when they discover an IRS tax lien has been filed against their employee.

For well known public figures (politicians, celebrities, etc.), IRS federal tax liens can do great damage to your reputation once the local press gets a hold of the news that the IRS has filed a federal tax lien on you for unpaid back taxes. Often they will publish news of your IRS tax problems for the world to see causing not only embarrassment and humiliation but damage to personal and business relationships.

So what can you do to avoid the IRS filing a federal tax lien?

Once a federal tax is assessed, the IRS collection cycle begins. Besides the usual IRS collection letters threatening to levy and seize your assets, the IRS will eventually issue a federal tax lien and file it in the public record as notice to the public that you owe back taxes to the IRS. The trick to avoiding the filing of a federal tax lien is to be proactive before the federal tax lien is filed by the IRS.

In lieu of a federal tax lien, the IRS can in many cases accept a Collateral Agreement which protects the government’s interest so they do not have to file a federal tax lien. The three most common assets used as collateral are: (1) letters of credit from a lender, (2) securities, or (3) surety bonds. There are other assets that can be used but these three are the most common and can go a long way towards getting a Collateral Agreement accepted quickly to avoid the filing of a federal tax lien.

So, avoiding the filing of an IRS tax lien is possible. It just takes knowledge of the Collateral Agreement process and approaching the IRS early in the collection cycle before they issue a federal tax lien. An experienced tax CPA or tax attorney is best suited to help you with this process as they know how to properly draft a Collateral Agreement, negotiate with the IRS, and get the Collateral Agreement accepted.

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Getting Rid of IRS Tax Liens and Fixing Your Credit Report

July 12, 2011 by

By Matthew J. Previte CPA MST
www.taxproblemsrus.com
July 12, 2011

Nothing can kill your credit rating like an IRS tax lien. Your credit report can drop about 100 points after an IRS tax lien is filed in the public record. Having a federal tax lien on your credit record can eliminate many lenders from loaning you funds to buy a house, a car, or to refinance your existing loan to get a more favorable rate. So just how do you deal with an IRS tax lien and fix the mess it has left in its wake? Well, to explain how, we need to start with what is an IRS tax lien, when does it come into existence, and how does one get it off your credit report.

IRS tax liens are filed in the public record to protect the federal government’s interest in IRS tax debts owed to it by you, the taxpayer. It is kind of like the IRS’s insurance policy. If you have any real estate or personal assets, the IRS tax lien attaches to it and allows the IRS to pursue enforced collection action (liens, levies, seizures) against your assets in order to collect what you owe them.

All IRS tax liens come into existence upon the assessment of a federal tax against a taxpayer. This usually happens when you file a tax return and it is processed by the IRS. However, federal tax assessments may also come into existence when the IRS audits your tax return, adjusts your tax return due to a mistake or missing W-2 or 1099, or they file a substitute tax return against you because you didn’t file a tax return. However the federal tax assessment came into existence, the IRS tax lien exists but is not effective against certain assets (like real estate) until it is perfected under state law by the filing of a federal tax lien in the public record.

The federal tax lien is filed in one of several places to insure it becomes public notice that you have an IRS tax problem and that the IRS has a federal tax lien securing the back taxes owed by you, the taxpayer, against your assets. Where an IRS tax lien is filed depends on state law. Some of the most common places the IRS files a federal tax lien is with one of the following: the Registry of Deeds or County Recorder, the office of county clerk, the office of town clerk, the office of probate judge, or the clerk of the circuit court. There are a few other places for some states but we won’t list them all here. The point is, state law controls where the IRS has to file its federal tax lien to be considered public notice that you owe them back taxes and that they have a claim against your assets. Most states have one place where federal tax liens need to be filed to be considered valid as against real estate while they have another place for IRS tax liens filed against personal property. To be sure, one must research their state’s law to determine where it requires federal tax liens to be filed.

To obtain a certificate of release of federal tax lien, one of several things has to happen. Either you have to full pay the tax, settle your tax debts through an Offer In Compromise and full pay the settlement amount, run out the statute of limitations on collection, or discharge the back taxes in bankruptcy. If there is real estate when you discharge any back taxes owed, the IRS will not release the lien until it expires. Liens generally last ten years but can be refiled if for some reason the collection statute has been extended beyond 10 years. There are several events that can extend the collection statute but we will discuss that in another article.

Keep in mind that with bankruptcy, some types of taxes are never dischargeable and for those types that are, you must have filed tax returns and wait certain periods of time before the taxes become dischargeable. There are also other rules beyond whether the taxes are old enough and of the proper type which must be met before one can qualify to file bankruptcy and discharge back taxes in bankruptcy. You should always consult a qualified tax resolution specialist as well as a bankruptcy attorney before filing. Otherwise, you may be surprised after you come out of bankruptcy court and the IRS is in hot pursuit, threatening to levy and seize every asset in sight.

To fix your credit rating, one must obtain a certificate of withdrawal of federal tax lien. A certificate of release of federal tax lien will not do as it only demonstrates that the IRS tax debts have been resolved to the satisfaction of the IRS. The problem with a certificate of release of federal tax lien is that it effectively lets the world know you have resolved your back tax debts but it does not remove the fact that at one time you owed the IRS back tax debts. Mailing a copy of the IRS certificate of release of federal tax lien to the big three credit agencies (Equifax, Trans Union, and Experian) only helps them update your credit file and notate that you have resolved your outstanding back taxes with the IRS. The original federal tax lien will stay on your credit report, along with the notation that it has been resolved, for 7 years. This hardly restores your credit score to its former level pre-IRS lien.

Obtaining a certificate of withdrawal of federal tax lien necessitates first requesting and receiving a release of federal tax lien with one exception which we will discuss in a bit. Once the back tax debt has been resolved through normal means (either full paid, discharged in bankruptcy—with no real estate owned, settled through an Offer In Compromise, or the collection statute has expired) and a certificate of release of federal tax lien has been requested by the taxpayer and issued by the IRS, then a request can be made for a certificate of withdrawal of the federal tax lien and the IRS will issue a certificate of withdrawal of federal tax lien.

As stated above, there is one exception where there is no need to obtain a certificate of release of federal tax lien first before requesting a certificate of withdrawal of federal tax lien. In fact the strange thing is that IRS procedure does not allow for a certificate of release of federal tax lien to be issued unless one of the above four criteria is met but it will allow a certificate of withdrawal of federal tax lien to be issued under new guidelines if the taxpayer enters into a Direct Debit Installment Agreement. Only certain taxpayers qualify to enter into a Direct debit Installment Agreement and they must meet one of several eligibility requirements as well.

Due to the current state of our economy, the IRS realized that the filing of federal tax liens was doing great damage to people’s credit ratings and their ability to borrow money for life’s necessities (car, home, college tuition, etc). So, they developed a new program that would allow those taxpayers who have resolved their tax debt or entered into a Direct Debit Installment Payment Agreement and that are currently compliant with all tax filings and current tax estimates or withholding levels, to request a withdrawal of federal tax lien. What the withdrawal effectively does is eliminate the effect of the original federal tax lien. It’s as if the original federal tax lien should have never been filed by the IRS in the first place. With a certificate of withdrawal of federal tax lien in hand, you can effectively remove and completely eliminate any trace of the federal tax lien from your credit report as if it never existed.

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Anguished 30 Year Retailer Avoids MA DOR Seizure And Bank Foreclosure

January 4, 2010 by

Henry was at the end of his rope. Mounting pressure from his bank to pay the delinquent balance of his business loan was beginning to become unbearable. He had already obtained two extensions on his loan. They were not going to wait much longer before foreclosing on his business. The MA Department of Revenue was also growing impatient and was about ready to seize his business in order to pay off nearly $50,000 in back taxes. Many corporate excise, sales, and withholding tax returns also needed to be filed. A loan application with a new lender to refinance and pay off his current bank loan was in danger of being rejected due to the state tax liens on his business and personal property. Without that new loan, he would be unable to pay off his current loan and avoid both a bank foreclosure and seizure by the MA DOR. Since he had also personally guaranteed the business loan and was held personally responsible by the MA DOR for the delinquent state taxes, he would lose all of his personal property as well. At age 54, he would have to start all over again and it would be difficult at best to obtain gainful employment after being out of the employment market for 30 years. He was at a loss as to what to do and called us for help. Our firm worked to submit any unfiled tax returns and then negotiated an installment agreement with the MA DOR for the delinquent taxes. This stabilized his tax situation and gave us time to work out the loan problem. Next, our firm negotiated with the MA DOR to obtain priority for the new lender’s mortgage over their state tax liens. As a result, the new loan was approved, the old loan was paid off, the MA DOR received $30,000 towards the delinquent taxes, and Henry’s 30 year old business was saved. The balance of nearly $20,000 in taxes would be paid off over the next 12 months ending his financial and emotional ordeal. Henry was given a new lease on life.

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