Published on: August 2, 2021

All You Need to Know About State Tax Liens

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    A state tax lien is a declaration by the government asserting their claim on your assets or their intent to garnish your wages due to unpaid tax debts. You have probably heard about liens in the financial industry, where a bank can place a claim on your property if you fail to repay a loan or a mortgage. A state tax lien works the same way. If you owe unpaid or partially paid back taxes, the taxing authority in your state can lay a claim on your assets. The state government is responsible for tax collection and will send you a notice of demand for payment if you have unpaid bills. This notice reveals the amount of taxes you should pay to the state and any accrued penalties. Failure to pay the full amount or seek an acceptable payment plan will prompt the state to put a claim on your assets and repossess your property.
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    Why You Should Act with Speed

    Many people panic when they receive a letter from their state government demanding back taxes. Yes, you have probably been slapped with a significant tax debt or even penalties, but you should stay vigilant and ensure that you resolve the problem quickly.

    Hefty Interests and Penalties Fees

    Your state will contact you if you file false returns or underpay your tax debt through a notice for payment. Some people innocently file their taxes well, but an adjustment is made by the state taxing authorities, leaving them with a balance. Whether you made a mistake when filing or believed that you filed everything correctly, failure to address the matter will likely lead to stiff penalties.

    Save Your Property and Prevent Wage Garnishment

    A state tax lien is just a mere declaration of interest in your asset by your respective state. Your property has not been claimed by the state yet. This is likely to happen if you are not proactive. The only way to safeguard your assets is to ensure their lien release.

    Maintain a Good Standing with the Taxing Authority

    Remaining in good standing with your state taxing authority will go a long way if you do have to have a state tax lien. It is unlikely that your property will be auctioned without any consideration of your situation. In many cases, subscribing to an offer in a compromise plan or pleading hardship will get you off the hook.
    There are several consequences to having a lien on your assets, such as hindering your ability to dispose of your assets, limiting your credit rating, and even harming your chances of getting a job. You can, however, find legal professionals who can walk with you during this difficult period.
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    How to Release a State Tax Lien

    A state tax lien limits you in several ways. For example, you won’t be able to sell or transfer the property to a third party. The lien will also affect your credit rating. There are steps you can take when you want the state to release your tax lien. These include:

    1. Contact Your State Government

    It’s important to establish contact with your state. Contacting your state ensures that you find out how much you owe and the respective years of the tax debts. Never pay the state before confirming these important details because paying a lesser amount will impact your credit score.

    2. Make the Full Payment

    A quick way to release the tax lien in your state is to clear your outstanding tax debt in full. This includes any accrued fees and penalties. The state should then release your tax lien and update their records showing that they do not have any legal claim on your assets.

    3. Create a Payment Plan

    If you can’t afford to pay in full, most states will allow you to make small increment payments until your tax debt is fully recovered. All you need to do is create a reasonable payment plan in good faith, and your state taxing authority will listen to you. Just remember to have everything in writing and be sure to outline how the state will release your tax lien.

    4. Join an Offer in Compromise Program

    Many states have Offer in Compromise (OIC) programs that let you make a lesser payment for acknowledged tax debts. It is, however, worth noting that these programs only apply in special circumstances, and not everyone is eligible. You are much likely to be accepted into the program if you are facing hardship or cannot make full payments. Eligibility for such programs varies from state to state, so it’s important to consult a professional for more information.
    Releasing a state tax lien does not have to be a complex process, even if you can’t fully pay your overdue taxes. If you follow the right steps and avoid the common mistakes, your tax lien will be released without much hassle.
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    Mistakes to Avoid When Seeking a State Tax Lien Release

    Mistakes made when you’re trying to release a lien can be costly. You will not only pay stiff penalties but you may lose your property altogether. Here are common things to avoid when faced with this problem:
    • Failing to hire a tax professional. You may feel like you can take on the state taxing authority by yourself, but an experienced professional knows what’s required and can make the process easier for you.
    • Overlooking previous tax years. This often results in high interests and penalties. Once you establish contact with your state, you can determine the amount owed and the respective years that you did not file your returns.
    • Not discussing the lien with your creditors. It is good practice to discuss your tax lien with credit bureau agencies and other creditors since it will be a public record.
    Making these mistakes can be costly and lead to years of bad credit. Having the right guidance will keep you on the right track and ensure the process is seamless.
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    Let Us Help You Release Your State Tax Lien

    A tax lien can seem like the end of the world, especially if you do not have the funds to make a full payment. Taking immediate action to release your lien is the only way to avoid losing your assets. With the right professionals on your team, you can come out of this unscathed. The Silver Tax Group specialists will work tirelessly to protect your assets and have your lien released. Reach out to us today if you wish to consult with a professional about your state tax lien.

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