A federal tax lien can happen to anyone – even the rich and famous. Just this summer, the news has been littered with reports of celebrities who have been hit with liens for unpaid taxes. Among the list are:
- Tori Spelling and her husband Dean McDermott were recently served notice of a tax lien for over $700,000 in back taxes. This is on top of another $259,108 they owe the state of California for 2014.
- Lauryn Hill was served notice of a $438,000 tax lien. Tax problems are nothing new for Hill, unfortunately; in 2014, she spent six months in a federal prison after being convicted of tax evasion when she did not pay $1 million that she owed. Upon release, she received notice of another $900,000 tax lien.
- Australian-born rapper Iggy Azalea has been on the receiving end of federal tax liens this year and last as well, with the IRS issuing notice of a $269,980 federal tax lien for 2015. This follows a lien for more than $390,000 for 2014.
Tax liens are a way for the government to restrict a debtor’s property until they repay the amount due. They are designed to create a hardship in order to induce cooperation. If you are facing a tax lien, there are several ways to remove it.
Tax lien process
If a federal or state taxpayer does not make a required payment, the government can issue a Notice and Demand for Payment. The Notice creates a tax lien, which restricts the indebted taxpayer’s property and money. The lien remains attached to the property, preventing the sale of houses, vehicles, even securities, until the lien is removed.
As long as the federal government or the state of Maryland has a lien on the property, it can levy. This is a legal process by which the government seizes the property or assets in order to pay some of the overdue taxes. This is a stressful and grueling proceeding so it is always better to try to take care of liens before they can be levied.
How to remove a tax lien
A lien is a burden on a property. There are a few ways to remove a lien, with the most direct way being to pay the taxes due. The government will release the lien within 30 days of full payment. If that is not a realistic option, some other options include:
- Requesting that the IRS discharge the lien on a certain property – this leaves the lien in place on your other property but allows flexibility to sell the unaffected property
- Request a withdrawal of the lien, which leaves the tax liability in place but removes the encumbrance
- Ask for a subordination of the lien, moving the IRS down the list of creditors, which can make it easier to obtain a line of credit
How a Baltimore tax lawyer can help
The tax code is intricate and can be confusing to non-professionals. If you face a federal or Maryland tax lien, turn to the expertise of the lawyers of Rosenberg Martin Greenberg. Our tax attorneys are committed to serving the needs of the greater Baltimore area. Contact us to learn how we can help you improve your tax situation.