The IRS recently announced changes to its procedures on filing liens with the hope of assisting taxpayers and small businesses in climbing out of their debt obligations.
In order to understand the impact of these changes and how they will affect your client, it is first necessary to be familiar with how a federal tax lien can affect, and possibly terminate, the sale of one’s property.
A federal tax lien gives the IRS a legal claim to a taxpayer’s property for the amount of an unpaid tax debt. A lien informs the public that the IRS has a claim against all property, and any rights to the property, of the taxpayer. This includes property owned at the time the notice of lien is filed AND any property acquired after the lien is filed. If the IRS places a lien against one of your clients, that lien will show up on title for any property owned by your client, no matter when purchased, until the lien is paid in full.
The new procedures enacted by the IRS focus on assisting taxpayers in paying off federal tax liens faster to minimize the negative impact that these liens have on their financial well-being. The five major changes include:
· Significantly increasing the dollar threshold when liens are generally issued.
The new rules generally prohibit the IRS from filing a lien unless unpaid taxes exceed $10,000 which is double the previous limit. The new dollar amount was aimed at keeping pace with inflation as the previous limit has been in effect since the mid-1980s.
· Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
The IRS will now minimize the damage to taxpayers’ credit scores after their debts have been fully paid. Liens will now be withdrawn after taxes are no longer owed. A “lien withdrawal” wipes out the lien from the taxpayer’s record immediately where a “lien release” leaves it on the record for at least seven years.
· Withdrawing liens in most cases where the taxpayer enters into a Direct Debit Installment Agreement.
For taxpayers who owe $25,000 or less to the IRS, they can enter into a Direct Debit Installment Agreement to pay the balance. In return, the IRS will allow for a lien withdrawal.
· Creating easier access to Installment Agreements for more struggling small business.
Prior to the changes in the IRS rules, only small businesses with under $10,000 in liabilities could participate in a payment program involving Installment Agreements. Now, small businesses with $25,000 or less in unpaid taxes can participate. In order to qualify, the businesses must arrange to make automatic payments from their bank accounts.
· Expanding a streamlined Offer in Compromise program to cover more taxpayers.
An Offer in Compromise is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to make a determination of whether or not to accept the offer. Under the recent changes, the Offer in Compromise program is being expanded to allow taxpayers who make $100,000 or less to participate. In addition, the taxpayers must owe less than $50,000 to the IRS, which is double from the previous limit of $25,000.
Keep in mind that no matter how your client resolves his or her debt obligation with the IRS, in order to avoid a delay at closing, it is important to obtain written documentation from the IRS stating that the debt has been paid off and that the lien no longer affects the specific property that your client is selling.
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I went to a panel a few weeks ago that included a yoga teacher, a celebrity nutritionist, a spiritual healer and a woman who created her own beauty line.
What really stood out to me from that workshop was what the yoga teacher said. A question was asked: How does one stay calm and focused in a busy and intense environment? The yoga teacher replied: Just relax, do yoga and breathe. I was taken aback by this comment, as it doesn’t give the ‘regular’ person the tools to ‘relax’ in a busy environment. Not everyone can do yoga everyday and stay calm. It made me think about someone telling me once, in response to my 3PM sugar craving, to take a few deep breaths, drink some water and the craving will pass – it doesn’t.
So what does one do? Is it possible to stop for a minute and think about what is going on around you, take a deep breath and attempt to stay calm in an intense situation? YES! It is being self-aware of YOU!
Self-Awareness, per Wikipedia, is the awareness that one exists as an individual being. Without self-awareness the self perceives and accepts the thoughts that are occurring to be who the self is. Self-awareness gives one the option or choice to choose thoughts being thought rather than simply thinking the thoughts that are stimulated from the accumulative events leading up to the circumstances of the moment.
So when you find yourself stressed or having a 3PM craving, have self-awareness, stop and think about your choices. Being self-aware doesn’t mean you have a higher power, it just means that you are actually engaging with yourself and your thoughts. Thinking about your next step instead of just taking it.
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