Federal Tax Liens on Property in San Jose, CA: Any Relief?

The purpose of my practice it to help taxpayers gain control over tax matters that are out of their knowledge base and comfort zone. Areas such as bankruptcy tax issues, innocent spouse relief and payroll tax issues where the taxpayer finds it necessary to get someone trained in the representation process, procedures, and details.

Another area that gets people on edge, anxious, and oppressed is the Federal Tax Lien. This is a powerful tool for the government as it attaches to all property owned now or acquired in the future. It is a claim for the property of any “person” who liable to pay any federal tax, but fails to make payment after a demand for payment has been made. The lien arises automatically and it protects the government’s interest in your property that includes real estate, personal property, and financial assets. For federal law purposes, a “person” is defined to include individuals, trusts, estates, partnerships, associations, companies, and corporations.

The public Notice of Federal Tax Lien (NFTL) is filed by the IRS for taxpayers who owe more than $10,000 of tax liability. This filing is done so that creditors are made aware that the government has a legal right to your property. This filing could take place with Land Records, Town Hall, and Secretary of the State. If a NFTL is filed, the IRS will send you a Notice of Federal Tax Lien Filing and Your Right to a Collection Due Process (CDP) Hearing. This is where you have the opportunity to show that a mistake has been made, or that there are other options that could be in the best interest of the government and taxpayer.

The best way to get rid of the lien is to make full payment of your debt. The IRS is entitled to protect its interest, so unless it is a mistake on the part of the IRS, you should have something to offer as an alternative, such as: Granting the IRS a mortgage on real property, or assigning accounts receivables that would cover the tax liability.

Otherwise, you can use the CDP hearing in an effort to get a:

Discharge of Property - This is where a specific property is released from the lien. Such as a house that was sold and all the equity was used toward the tax liability or there is no equity there.

Subordination - This is where other creditors can move ahead of the IRS, making it easier to get a loan which could be used to make payments against the tax liability.

Withdrawal - This is a withdrawal of the public Notice of Federal Tax Lien, indicating to the other creditors that the IRS is not competing for your property. With the 2012 Fresh Start Initiative the following can result in withdrawal:

• You are a qualifying taxpayer (i.e. individuals, businesses with income tax liability only, and out of business entities with any type of tax debt)
• You owe $25,000 or less (If you owe more than $25,000, you may pay down the balance to $25,000 prior to requesting withdrawal of the Notice of Federal Tax Lien)
• Your Direct Debit Installment Agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is earlier
• You are in full compliance with other filing and payment requirements
• You have made three consecutive direct debit payments
• You can’t have defaulted on your current, or any previous, Direct Debit Installment agreement.

If you have any questions regarding the federal tax lien in San Jose, CA feel free to contact me at (408) 627-8079 or email me at dan.ohara@oharataxes.com.

Dan Ohara

Ohara Tax Service

1569 Willowgate Dr.

San Jose, CA 95118