In a letter written to Jean-Baptiste Leroy in 1789, Benjamin Franklin wrote the now infamous words: “in this world nothing can be said to be certain, except death and taxes.” Though Franklin was neither the first nor the last writer to express the sentiment, its reality seems to be as old as man himself. Where taxes are concerned, they can make life miserable.
Falling behind on either income or property taxes can lead to tax liens. Once tax liens are attached to a property, they can be extremely difficult to remove without actually paying the full amount owed. But a good attorney never says never. There are some circumstances that allow unpaid taxes to be dismissed; other circumstances allow for a reduction of the debt when dismissal is not possible.
Income Taxes and Liens
The Internal Revenue Service (IRS) can file a tax lien against the property of a delinquent taxpayer. Such liens are usually administered only as a last resort, but they are very serious when filed. If unpaid taxes remain unsatisfied after the taxpayer is given sufficient time to make good on his or her debt, the property can be seized and sold at auction. Any proceeds realized from the sale then go toward settling the text debt.
Individual states also have the authority to file tax liens on property for unpaid income taxes. However, since unpaid taxes at both the federal and state levels typically go hand-in-hand, the IRS is given preference. They would be the senior lien holder while the state would be in the secondary position.
Chapter 7 and 13 bankruptcies may be helpful in the event tax related liens are placed on your property. A bankruptcy may not solve all of your tax problems, but it could prevent government officials from seizing and selling your home. The conditions of bankruptcy relating to tax liens do not apply in any circumstances under which tax fraud has occurred.
Property Taxes and Liens
Like the federal and state governments, local government entities are free to attach liens to property when property taxes go unpaid. Nevertheless, there is a significant difference between these kinds of liens and those filed by federal and state taxing authorities. A lien for failure to pay property taxes is attached to the property rather than its owner. If an owner should seek to sell a property in order to get out from under its associated tax debt, the lien and debt then become the responsibility of the new owner.
A property with such a lien can be seized and sold to satisfy unpaid property taxes. This is rarely done, as local municipalities seldom have the resources to enforce such liens, but there is always the possibility.
If you are facing a lien due to unpaid income or property taxes, you need to know what your options are. An experienced attorney is your best bet. With the help of an attorney, you might be able to:
- negotiate a reduction of your total tax liability
- negotiate a payment plan to make paying more affordable
- successfully have your tax liability dismissed
- achieve bankruptcy protection under chapters 7 or 13.
The one thing you should not do is ignore a tax lien on your property. Ignoring it is a virtual guarantee of seizure and sale. Keep in mind how important revenues are to taxing authorities. They tend to be patient for only so long. Deal with your tax lien by contacting a qualified attorney. The experienced attorneys in our firm can help.