Perhaps in these harsh economic times, you have incurred the wrath of the government by having a small business tax lien placed on your holdings. With proper guidance and advice, this harsh event may not spell the end f your dreams, and will be cleared with diligence and attention to the law. Seeking the help of a lawyer and tax consultant who specialize in clients who have a small business tax lien should be your first step. There is no good reason to go at it alone.
What Happens with a Small Business Tax Lien?
The small business tax lien attaches all of your property to the government, where they are attempting to collect on tax bills owed. To avoid this, a business owner should simply pay their taxes. However, in the event of a lien, that time has long passed. The government will review your assets, and attach the lien against everything it can find. A notice will be publicly published so other creditors know the government’s claim takes priority. This will limit the amount of credit available to your business, and unfortunately, even bankruptcy will not discharge it. A lien will remain with a small business owner until the debt is paid- and the longer it goes unpaid, the larger the interest charges and associated fees will be.
Removing a Small Business Tax Lien
To remove a small business tax lien, there is only one way. This is to pay off the debt in its entirety. Failure to do so will only increase the liability. After paying the debt of entirely, the government will release the lien on your property after 30 days, allowing any other creditors to come in to reclaim their debts against your business, if there are any. If you are unable to pay off your debt, the government steps in to liquidate your assets to cover your bills. This means a discharge of all property, which will be sold at auction to the highest bidder. There is also a situation called subordination, where the lien is not removed, but a business may continue with the goal of future profits moving toward the priority payment of the lien’s charges. Finally, and this is not a situation that is ideal, the government can remove their public notice, allowing other creditors to attempt collection at the same time as the IRS.
Avoiding a Small Business Tax Lien
Simply, pay your taxes on time, and properly. Doing so will negate any future needs for the government to step in a control your assets in order to discharge a lien.