Introduction to Tax Liens and Garnishments in Florida
Understanding tax liens and garnishments is crucial for Florida residents dealing with outstanding tax liabilities. These legal mechanisms are tools used by the Internal Revenue Service (IRS) and Florida state authorities to enforce tax collection. This article delves into their intricacies, legal implications, and remedies available to taxpayers.
What is a Tax Lien?
A tax lien is a legal claim against a taxpayer's assets due to unpaid tax debt, ensuring the government's interest in the property takes precedence.1 The IRS issues a Notice of Federal Tax Lien (NFTL) after assessing a tax liability and the taxpayer’s failure to pay.
Tax Lien Process in Florida
In Florida, a tax lien attaches to all the taxpayer's property and rights to property. This includes real estate, securities, vehicles, and future assets acquired.2 The filing of a tax lien can severely affect an individual’s credit rating, making it challenging to obtain loans or credit.
Implications of Tax Liens
The presence of a lien might complicate the sale or financing of the asset. A lien can also hinder future financial dealings until it is resolved or the statute of limitations expires.
Removal of Tax Liens
Taxpayers can seek withdrawal, discharge, subordination, or release of the lien:
- Withdrawal: The IRS removes the public notification, but not the debt. Eligibility involves setting up a direct debit installment agreement.
- Discharge: Removes the lien from specific property, allowing sale without attachment.
- Subordination: Permits other creditors to leapfrog the IRS lien.
- Release: Occurs once the debt is paid, becomes unenforceable, or when collection becomes impossible.
What is a Wage Garnishment?
Wage garnishment is a method the IRS uses to collect overdue taxes by deducting a portion of the taxpayer’s wages directly from their paycheck.3 This can significantly impact an individual's disposable income.
Garnishment Process
Once the IRS sends a Final Notice of Intent to Levy and the taxpayer neglects or refuses to pay, garnishment begins. In Florida, the amount exempt from garnishment is a percentage of disposable earnings, often no more than 25%.4
Stopping Wage Garnishment
- Paying the Tax Debt: The surest way to halt garnishment. Full payment releases the levy.
- Setting up a Payment Plan: Installment agreements can temporarily cease collection activities.
- Offer in Compromise: Settle tax debt for less than owed if financial distress can be proven.
- Bankruptcy: Automatically stops wage garnishments but has severe consequences.
Actionable Steps
- Verify the debt by reviewing the tax lien or garnishment notice.
- Contact the IRS or Florida’s Department of Revenue promptly to discuss payment options.
- Explore tax relief programs or payment plans to mitigate the financial burden.
- Consult with a tax professional or attorney for specialized guidance and negotiation.
Conclusion
Understanding and addressing tax liens and garnishments in Florida is essential for regaining financial freedom and ensuring compliance. Taking informed and proactive steps with professional advice can alleviate the burden significantly.
FAQs
- What is the difference between a tax lien and tax levy? A lien secures the government’s interest in your property for a tax debt, while a levy confiscates the taxpayer’s assets to satisfy the debt.
- How long does a tax lien last? A federal tax lien lasts for ten years from the time of assessment unless renewed.
- Can I sell my house with a tax lien? Yes, but the lien must be paid at closing or released to clear the title.
- How does a tax lien affect my credit? Tax liens used to be part of credit reports but were removed. However, they can still influence financial transactions.
- Can the IRS garnish my wages without notice? No, they must issue a Final Notice of Intent to Levy and a 30-day notice period is provided.
- How can I dispute a lien or garnishment? Filing an appeal or requesting a Collection Due Process hearing can provide relief options.
- Where can I find professional help? Visit our dashboard for a consultation with a tax expert.