Resolving a tax lien—whether federally or in Virginia—is vital to ensure smooth property transactions, protect credit, and avoid legal complications. With the right steps, such liens can be efficiently addressed and removed, allowing you to reclaim financial freedom and proceed with confidence.
Understanding and Removing Tax Liens
Tax liens are a legal claim by the government on your property due to unpaid taxes. These liens can disrupt financial activities, particularly property sales or purchases. Federal tax liens arise from unpaid federal taxes, while Virginia state tax liens result from unpaid state taxes. Regardless of the source, addressing liens promptly is crucial in a real estate transaction.
To resolve tax liens, follow these key steps:
- Request a Certificate of Release of Tax Lien:
- For federal liens, submit IRS Form 12277 (Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien) with proof the lien was filed in error (e.g., a cancelled check or account transcript). In Virginia, contact the Department of Taxation and provide documentation to resolve the lien.
- Request Expedited Processing (if needed):
- Attach a written request explaining urgency—for instance, a pending property sale or credit issues. Federal and Virginia authorities can expedite releases if the lien causes financial harm.
- Work with Advocates:
- For federal liens, the IRS Taxpayer Advocate Service (TAS) is an excellent resource for cases causing hardship (call 1-877-777-4778). Virginia residents can reach out to local taxpayer assistance centers for guidance.
- Obtain the Release Certificate:
- Once the lien is resolved, the governing body will issue a release certificate, clearing your property records.
Examples of Tax Lien Removal in Action
- Federal Case: Jane, a homeowner in Richmond, discovered a federal tax lien erroneously filed against her property during a title search for her pending sale. By submitting Form 12277 and supporting evidence to the IRS, she obtained a Certificate of Release within 30 days and closed her sale without issues.
- Virginia Case: John, a small business owner in Williamsburg, faced a state tax lien affecting his ability to refinance his property. After working with a tax attorney and the Virginia Department of Taxation, he resolved the lien through payment and obtained a release certificate within two weeks.
Additional Considerations
- Timeframe: Tax authorities usually process lien releases within 30 days. Expedited processing can shorten this timeline if the lien affects financial transactions.
- Record keeping: Always retain copies of correspondence, documentation, and proof related to the lien.
- Professional Help: Enlist a tax professional or attorney if you encounter delays or complexities in resolving a lien.
- Impact on Real Estate Closings: Unresolved liens often surface during title searches, causing delays. Being proactive ensures smoother property transactions.
Conclusion
Resolving federal or Virginia tax liens is a critical step for clear property titles, financial stability, and peace of mind. By understanding the process and taking action, you can effectively remove liens and proceed with your goals.
Have a real estate closing in Virginia? Simply list “Strong Title, LLC” on your next purchase or sale contract and message us or this website. Questions? Call 804.533.5297, 24/7, 365 days per year.