JK Harris & Company warns taxpayers about the consequences of a federal tax lien

GOOSE CREEK, SC, August 22, 2010 (Press-News.org) According to the National Taxpayer Advocate's semiannual report released in July, federal tax liens are up 475% since 1999.

Federal tax liens are a claim against your property and are filed when a taxpayer fails to pay the back taxes owed within ten days of receiving an IRS demand for payment notice. According to JK Harris & Company, the nation's largest tax representation firm, the IRS issues tax liens to stake their claim in getting paid.

"The primary function of the Internal Revenue Service is to collect revenue for the Department of the Treasury," said Troy Sholl, a Licensed Taxpayer Representative at JK Harris & Company. "The IRS files federal tax liens against taxpayers to protect the interests of the government."

When a taxpayer fails to pay their tax debt, the IRS issues a Notice and Demand for Payment, giving the taxpayer ten days to fully pay their back taxes. If the taxpayer neglects or is unable to pay the debt within ten days, a Notice of Federal Tax Lien is then filed. This is a public notification that the IRS has a claim on certain property or assets of a taxpayer. The lien gives the IRS interest in a taxpayer's property as a creditor and allows the IRS to collect their share from the sale of the property if it is sold.

"Generally, there is little that can be done to avoid the filing of an IRS lien," Sholl said. "Among the best measures to attempt prevention of a lien filing is payment of the debt below $25,000 or borrowing the money to pay the debt in full."

If the taxpayer cannot pay his tax debt and the lien is issued, the negative impact can be long-standing. The filing of a tax lien may appear immediately on a consumer's credit report and hurt their credit rating. According to National Taxpayer Advocate Nina Olsen, a lien filing may cause a 100-point drop to a credit score. Having a tax lien on his or her credit history may prevent a taxpayer from buying a home or car, signing a lease or getting a credit card. Many employers also check credit reports, so the filing of a tax lien might ultimately affect a person's ability to get or keep a job.

"The best defense is a good offense," said Sholl. "Pay your tax debts off quickly and, in most cases, consult a professional for tax resolution advice."

JK Harris & Company, LLC, (www.jkharris-company.com) based in Goose Creek, S.C., is the nation's largest tax representation firm and has served over 250,000 customers since its founding in 1997 by John K. Harris. For further information, please contact Gina Anton, Director of Communications, at (843) 576-2255.