Tax Lien & Levy Release


Tax Lien & Levy Release

Tax lien and levy release are two important concepts in the field of taxation, particularly in the context of tax debt resolution and relief. When taxpayers fail to pay their taxes, the government has the authority to impose a lien or levy on their property as a means of collecting the outstanding tax debt. However, taxpayers who are able to resolve their tax debt can seek to have the tax lien or levy released. Let’s take a closer look at what tax lien and levy release entail.

Tax Lien Release:

A tax lien is a claim by the government on a taxpayer's property, including real estate, personal property, and financial assets, as security for the payment of unpaid taxes. The government typically files a public notice of the tax lien, which can negatively impact the taxpayer's credit score and make it difficult to sell or transfer the affected property. However, taxpayers who are able to pay their tax debt or reach a resolution with the taxing authority can request a tax lien release.

To obtain a tax lien release, taxpayers must typically provide evidence of full payment of the outstanding tax debt, including any penalties and interest. This can be done by paying the debt in full, entering into a payment plan with the taxing authority, or negotiating a settlement, such as an offer in compromise. Once the tax debt is fully satisfied, the taxing authority will issue a release of the tax lien, which releases the government's claim on the taxpayer's property. This release is typically filed with the appropriate government office where the tax lien was initially recorded, and the taxpayer's credit report can be updated to reflect the lien release.

Tax Levy Release:

A tax levy is a legal seizure of a taxpayer's property by the government to satisfy a tax debt. Unlike a tax lien, which is a claim on the property, a tax levy involves the actual seizure and sale of the property to pay off the outstanding tax debt. The government can levy various types of property, including bank accounts, wages, real estate, and personal property.

Taxpayers who have had their property levied by the government have several options to seek a tax levy release. One option is to pay the tax debt in full, including any penalties and interest, which will result in the release of the levy. Another option is to demonstrate to the taxing authority that the levy is causing an undue hardship, such as preventing the taxpayer from meeting basic living expenses.

In such cases, the taxing authority may release the levy to alleviate the hardship, but the taxpayer will still be responsible for resolving the tax debt. Taxpayers can also request a levy release if they can show that the levy was improper or in error, such as if the tax debt has already been paid or if the taxpayer has a valid dispute with the taxing authority.

It's important to note that tax lien and levy releases do not eliminate the underlying tax debt. Taxpayers are still responsible for resolving their tax debt even after obtaining a lien or levy release. However, obtaining a lien or levy release can help taxpayers regain control of their property, alleviate the negative impact on their credit, and provide an opportunity to negotiate more favorable payment terms with the taxing authority.

Tax lien and levy releases are important tools for taxpayers who are seeking to resolve their tax debt and regain control of their property. Taxpayers can obtain a tax lien or levy release by fully paying the outstanding tax debt, entering into a payment plan or settlement, demonstrating an undue hardship, or proving that the lien or levy was improper or in error. It’s important for taxpayers to understand the process and requirements for obtaining a tax lien or levy release and consider seeking professional tax advice or assistance to ensure the best possible outcome.