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Federal tax liens, part 1: responding to the notice

A tax lien doesn't take your property. Technically, a "levy" does that, not a lien.

But if you get a notice of federal tax lien (NFTL) in the mail, it's important to take action promptly in response. Otherwise, the IRS could keep you from selling your home or getting fresh financing for your business.

In this two-part post, we will discuss federal tax liens and how a skilled tax attorney can help you address them.

One way an attorney can help is by seeking to avoid a lien in the first place. This could be done by resolving your underlying tax debt by negotiating with the IRS on your behalf. It may be possible, for example, to work out an offer in compromise (OIC) or an installment agreement.

Contesting the imposition of a lien is also possible. Federal law requires the IRS to follow strict procedural formalities before filing a tax lien. For example, the IRS must previously have sent a Notice of Deficiency, informing you that you are deficient in tax payments. A knowledgeable tax attorney can insist that the government comply with these formalities.

Granted, contesting whether you really owe the tax may not always be practical. Instead of trying to avoid a tax lien, it may make more sense to focus on how to get rid of it.

Here too an experienced attorney can help you understand your options and choose a plan for effective action. In part two of this post, we will discuss lien release, subordination of liens and other considerations involved in seeking to clear up a federal tax lien.

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