3 Reasons a Tax Lien May Be Initiated Against You

Paying taxes may not be everyone's idea of a good time, but it is an obligation every income earner must fulfill. Even more, there are times when people owe more than they can afford to immediately pay off, but with the right level of cooperation, it can be easy to resolve this matter. However, when taxpayers in this scenario do not make an effort to resolve their unpaid balances, a lien may be implemented. 

1. No Contact

When someone has a balance due for their taxes, it is hard for them to say they were unaware. First, when you file, you will be provided with details about how much you owe. Second, once the return has been processed, the IRS sends out multiple letters to the taxpayer with details about the balance due and how to pay it. 

For this reason, when an individual simply ignores the notices that keep coming in the mail, eventually, the IRS will often initiate a lien.

2. Payment Plan Default

Even if a taxpayer is proactive and contacts the IRS to resolve their balance due with a payment plan, the effort cannot stop there. Whatever the terms of the arrangement are, you must adhere to them. 

If you miss several payments, especially in a row, and you do not contact the IRS to explain why, after some time, the lien process may be started. If you act quickly enough in this situation, you may be able to have the lien stopped and your payment plan adjusted.

3. Repetitive Mistakes

It is no secret that figuring out your tax situation is not always an easy process to complete, and for this reason, mistakes are normal and often easy to work around. The real problem arises when taxpayers make the same mistake over a long period, such as claiming far more exemptions than they have to minimize their tax deduction throughout the year, which leaves them with a large balance due. 

In this case, the IRS may see this scenario as less of a mistake and more of an intentional act. In some rare cases, this repetitive behavior may make a taxpayer more likely to have tax liens placed against them. 

If you are on the verge of having a lien placed against your assets or the lien process has already been initiated, be sure to speak with a tax professional for assistance as soon as possible.

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Do you prepare your own taxes each year? Have you received letters months after you have filed your taxes and spent your return telling you that you have made an error and that you owe the IRS a check to cover the discrepancy? This is something that has happened to me four times in the past eight years. Because of small errors, I have had to come up with money that I had to pay back and it made things more difficult than you might think. Since the last time, I have been paying to have my taxes prepared professionally and it has actually helped a lot. Find out what a difference a professional tax preparer could make on your taxes this year here on my blog.