As a business owner, you can be held personally responsible for your company’s failure to file Form 941 or properly collect payroll taxes. A common consequence: IRS tax liens. These can attach to both business and personal assets. Read on to learn more about the lien process and how it might impact your business — and personal life.
The lien process begins with a Notice of Federal Tax Lien from the IRS. This notice alerts creditors to the federal government’s current rights to your property. Notices may irreversibly harm credit and are therefore devastating for already struggling small businesses.
Trust Fund Recovery Penalty
Sec. 6672 of the Internal Revenue Code authorizes the use of a Trust Fund Recovery Penalty to encourage prompt payment of withheld payroll taxes. This penalty can be assessed against any individual responsible for collecting employment taxes.
How to Remove a Tax Lien
The most reliable means of removing a tax lien? Paying the debt in full. The IRS will release the lien within thirty days of payment. Unfortunately, if you’re like most debt-ridden employers, you cannot afford a lump sum approach. Other options include:
- Discharges, which remove liens from certain properties.
- Withdrawal, which leaves you liable for tax debt but removes the Notice of Federal Tax Lien from public view.
- Subordination, which doesn’t remove the lien but may make it easier to work with creditors.
Request for Appeal
If you believe that the federal government issued a tax lien in error, you may be eligible for appeal. The appeals process begins with a formal written protest, including a copy of your notice from the IRS and the reasons underlying your dispute. It’s critical that you request appeal as soon as you receive notice from the IRS.
Highland Tax Group can help you handle your IRS tax lien in calm, strategic, effective fashion. Get in touch with our experienced team immediately at 720-398-6088, or visit our website.