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Defining the federal tax lien

Even if you have been careful filing and paying your taxes, the chances are that something has gone wrong, especially if your taxes are complex. You may end up in the same situation as many other people in Washington, D.C., who suddenly find themselves slapped with a federal tax lien. At Ammerman & Goldberg "Bankruptcy" Law Office, we are prepared to answer your questions regarding tax liens and other problems with the Internal Revenue Service.

According to the IRS, a federal tax lien is the government’s legal claim against certain properties that it is entitled to make if you don’t pay your tax debt on time. This can include personal property, real estate and financial assets. A lien differs from a levy in that the lien merely states that the government has a legal right to your property, while a levy occurs when your property is actually seized by the government. The money resulting from the sale of your property would then go toward the taxes you owe.

If you get a letter warning you that a lien has been placed on your property, the best way to get rid of it is to pay your outstanding taxes. You may be able to work out a payment arrangement with the IRS if the amount you owe is significant.

Will filing for Chapter 7 or Chapter 13 bankruptcy help if you have a federal tax lien? It might, if a bankruptcy discharge can ease your financial burden enough to repay your taxes. However, you should know that even after a bankruptcy, you may still have the lien against you. For more information on how bankruptcy can help during times of financial crisis, visit our page by clicking here.

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