WHAT IS THE DIFFERENCE BETWEEN A TAX LIEN AND TAX LEVY?

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It is a typical day, and as usual, you are hard at work keeping your business or personal affairs afloat and doing the small things to earn repeat business. To ruin a perfectly good day, you receive a notice of a lien or levy from the IRS/state, seemingly out of nowhere. The questions pound like rough waves in your brain. What is a lien? What is a levy? What does this mean for my company? What steps must I take to resolve this issue? You are not alone. This happens much more frequently than one would think.

A lien is legal demand placed against a company’s property to guarantee payment of debts owed. The type of debt owed will determine the type of lien.

A Notice of Federal Tax Lien is filed to notify creditors. In order to get rid of the tax lien, the options are paying the balance in full, or if eligible, applying for a certificate of discharge, subordination, or withdrawal.

A levy will actually allow the IRS to seize and sell any real or personal property to satisfy the delinquent tax debt. Property could be considered cars, boats, houses, wages, retirement accounts, bank accounts, etc. Levies are not filed unless you have been sent a Notice and Demand for Payment, neglected or refused to pay the tax debt, and you were sent a Final Notice of Intent to Levy and Notice of your Right to a Hearing.

In order to have a levy released, you will need to contact the IRS as soon as possible to explain your circumstances. The levy may be released if it is causing an economic hardship. And there are other possible solutions that The Walton Firm attorneys can help you navigate. Don’t delay another day. Call us for your free consultation.

WHAT IS AN AUDIT?

When most hear the word audit, fear, panick and confusion is automatically evoked. It doesn’t have to be this scary with experts helping to guide you through the process. An IRS audit is a review or examination of a corporation or individual tax returns to ensure information is being reported correctly.  

Audit Selection. The IRS/state randomly selects approximately 1% individual returns and 0.6% business tax returns for audit each year.  Most audits are selected because of an issue or transaction with another taxpayer, for instance, employer and employee.

Taxpayers Notification. The taxpayers are notified of an audit via mail by the IRS or state taxing authority.

Methods of the audit. An audit may be conducted by mail or through an in-person interview with an IRS agent.  The IRS/state tells the taxpayer what records are needed.

Length of an Audit. An audit length varies depending on the type of audit, the complexity of documents being reviewed, the availability of information being requested, the availability of for parties to schedule the meetings and the taxpayer’s agreement or disagreement with the IRS/statefindings.

Records are needed. The IRS provides the taxpayer with a written request of the documents needed to subsaniate the deductions or credits reported on your tax return.

Audit Determinations. An audit results can be either no change or the IRS/state disagrees with the taxpayers information reported.

If taxpayer agree. If taxpayer agrees with the IRS findings, the taxpayer signs the examination report.  If any monies are due, the taxpayer receives a tax bill from the IRS/state.

If taxpayer disagree. The taxpayer is provided their appeal rights.

Let’s talk. Don’t delay another day. Contact us for your free consultation.

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