Legal Thought’s – Episode 2 of Dealing with IRS Liens

Coleman Jackson, P.C. | Transcript of Legal Thoughts
Published July 31, 2023

Attorney introduction: Welcome to Legal Thoughts! My name is Coleman Jackson and I am an attorney at Coleman Jackson, P.C., a taxation, litigation, and immigration law firm based in Dallas, Texas.

In addition to myself, we have Leiliane Godeiro – Litigation Legal Assistant, and our administration staff Ernesto Munoz and Michelle Gutierrez.

On today’s “Legal Thoughts” podcast, our Litigation Legal Assistant, Leiliane Godeiro will be interviewing me in our continuing federal tax series entitled, “ Dealing with the IRS”. In todays Legal Thoughts podcast the attorney will be talking about IRS liens and the taxpayers’ options in dealing with them. This is Episode 2: “Dealing with IRS Liens”.

INTERVIEWER: Leiliane Godeiro, Litigation Legal Assistant

Hi everyone, my name is Leiliane Godeiro and I am a Litigation Legal Assistant at the tax, litigation and immigration law firm of Coleman Jackson, Professional Corporation. Our law firm is located at 6060 North Central Expressway, Suite 620, right here in Dallas, Texas, 75206.

Good afternoon Attorney; thank you for being here with me to today as I interview you in our continuing podcast series entitled; “Dealing with the IRS”.

In this second episode in this Legal Thoughts Podcast series,  our topic today is  “Dealing with IRS Liens”.

Attorney, let’s get started.

QUESTION 1: Attorney, please explain, what is an IRS lien?

ATTORNEY ANSWER – QUESTION 1:

Good afternoon Leiliane;

The Federal Tax Line Act of that was enacted into law in 1966 created Internal Revenue Code Sections 6321 through 6326. These sections 26 United States Code, provides that “if any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, additions to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.”

Leiliane, what all this means in plain English is that the following facts have been established:

1.The IRS has made a tax assessment against the taxpayer (tax assessment simply means the IRS has put on the taxpayers’ tax account that the taxpayer owes the United States government due to taxable income tax, gift tax, estate tax or some other form of lawful taxes, penalties or interest; and

2.The IRS has followed all lawful procedures and notified you that you owe the outstanding taxes, penalties and interest; and

3.You the taxpayer has ignored the IRS notices to you or you otherwise has not made arrangements to satisfy the outstanding tax debt.

Note that the lien is created as a matter of law; if the above facts one through three are true, there is a tax lien created against you (the taxpayer) in favor of the United States government.  The lien creation does not require any court involvement or any further actions by you, the IRS or anyone else.

INTERVIEWER: Leiliane Godeiro, Litigation Legal Assistant

Interviewee Comment:  Attorney what a IRS tax lien is now absolutely clear to me now!

QUESTION 2: Now that the IRS has a tax lien against the taxpayer, what now?

ATTORNEY ANSWER – QUESTION 2

Well it means that the IRS tax lien attaches to all of the delinquent taxpayer’s real and personal property regardless of where it is located. Now this IRS tax lien attaches to the delinquent taxpayers property that is in existence on the date of the lien as well as any property in the future that the taxpayer has a legal interest in directly on indirectly. For example, putting property in a trust is ineffective in defeating an IRS lien because the lien attaches to all property that the delinquent taxpayer has any beneficiary interest in as well as any real and personal property acquired during the existence of the lien that the taxpayer has legal title.  The IRS tax lien is not defeated at death of the delinquent taxpayer either because the lien attaches to the decedent’s property both real property and personal property owned by the delinquent taxpayer.

The legal term “attaches” simply means that the IRS lien by law connects to the taxpayers property like glue to two pieces of paper; they are glued together and you cannot separate the two.

And Leliane, these are not all the ramifications for the delinquent taxpayer; there are potentially broad family and financial consequences as well resulting from the IRS tax lien.

INTERVIEWER: Leiliane Godeiro, Litigation Legal Assistant

QUESTION 3: Attorney, what are some of those other ramifications of have an IRS tax lien?

ATTORNEY ANSWER – QUESTION 3

Okay; the ramifications are very expansive. The two pieces of paper glued together tend to tell the story regarding the reach and strength of a IRS lien. Take for example these ramifications or effects of the tax lien on the delinquent taxpayer:

Credit – most people from time to time want to access a credit instrument to buy real estate, buy a car, investment in equipment, and all other kinds of activities that require money and the delinquent taxpayer cannot pay for in full with cash;

Employment – most people from time to time want to work or be employed to earn a living for themselves and their families. Employers may not want to hire someone who, perhaps, cannot handle their financial affairs in responsible way;

Family relations– most people from time to time want to be in a steady, stable and supportive family. Family members and potential family members could be reluctant to enter into or maintain relations under the stressful situation of dealing with bill collectors and the threat of financial ruin;

Responsible leadership positions– in their church, in their community, in their local, state and federal government. Some people will see the delinquent taxpayer as possibly irresponsible and dishonest.

Travel Restrictions— when a delinquent taxpayer owes more than $50,000, the IRS has the authority in U.S. tax law to refer the delinquent taxpayer to the U.S. Department of State for the purpose of restricting their U.S. passport or revoking it all together. This would not impact domestic travel; but, it most certainly will hinder travel to most international destinations which require valid passports to travel into the country.

INTERVIEWER: Leiliane Godeiro, Litigation Legal Assistant

Interviewee’s Comment: I can see how all those negative consequences to occur when a taxpayer is under an IRS tax lien.

QUESTION 4: Attorney is there any possible way to legally get rid of an IRS tax lien?

ATTORNEY ANSWER – QUESTION 4

• Yes, indeed. There are several possible ways to get rid of an IRS lien:
• First of all you need to test the validity of the lien to begin with; and
• Assuming the lien is valid, consider getting rid of the lien by

1.Borrowing the money or earning the money to pay the tax debt in full.  You need to first check with the IRS Lien Operations to get the lien pay off balance.  Now this balance likely to be higher than any recent correspondence that you might have received from the IRS or any annual statements that you might have received from them;

2.Second, you can send an official request to the IRS to release or discharge the lien on certain pieces of property, to say, facilitate a real estate sells transaction.  This lien discharge procedure typically agreed to by the IRS to collect part or all of the outstanding debt from the real property transfer or sale.  The IRS tax is typically paid out of the escrow from the real property transaction;

3.Third, you can request that the IRS to withdraw the lien when the ten year statute of collection has expired;

4.Fourth, you can in some circumstances seek a release of the lien upon agreeing to an installment agreement with the IRS for monthly payments of the outstanding tax debt.

INTERVIEWER WRAP-UP: Leiliane Godeiro, Litigation Legal Assistant

Attorney, thank you for being here today with us, this information about dealing with an IRS lien. Hopefully our audience finds it informative and helps them to know their rights as taxpayers; know how to protect their rights in the unfortunate event that they or their business has an IRS tax lien; and hopefully our audience knows now how to preserve their legal rights under the federal tax code if they are unfortunately have a tax lien on their attached to their real and personal property.

Our listeners who want to hear more podcasts like this one should subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or where ever you listen to your podcast. Everybody take care! And come back in about two weeks, for more taxation, contracts, litigation and immigration Legal Thoughts from Coleman Jackson, Professional Corporation, located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620, Dallas, Texas 75206.

English callers: 214-599-0431 | Spanish callers: 214-599-0432 |Portuguese callers: 214-272-3100

ATTORNEY’S CLOSING REMARKS

This is the end of “LEGAL THOUGHTS” for now.

Thank you for giving us your valuable time this morning and listening to our law firm’s Legal Thought Podcast. This has been the first episode in our new podcast series entitled dealing with the IRS. Hope you enjoyed Episode One: “ Dealing with an IRS Lien”.

If you want to see or hear more taxation, contracts, litigation, and immigration LEGAL THOUGHTS from Coleman Jackson, Professional Corporation. Subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify, or wherever you listen to your podcast.

Stay tuned! We are here in Dallas, Texas, and want to inform, educate and encourage our communities on topics dealing with taxation, litigation, and immigration. Until next time, take care.