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IRS Notice 1450 – What You Need To Know and Do

IRS Notice 1450 – What You Need To Know

IRS Notice 1450IRS notice 1450 provides instructions on how to request a Certificate of Release for a Federal Tax Lien once you have satisfied the balance due. Notice 1450 outlines the procedures for releasing a federal tax lien. It first instructs you on how to obtain a payoff amount of your past-due tax balance.  Once paid, it permits you to have the lien erased. The following section of IRS 1450 discusses how to obtain a copy of your Certificate of Release.  This is the paperwork proving that the tax lien has been eliminated. Finally, IRS notice 1450 explains what to do if the IRS has not released the lien within 30 days after you paid off the tax bill.

If you receive this letter, it means the IRS has placed a lien on some of your property. The instructions for requesting a Certificate of Release of Federal Tax Lien are contained in IRS Notice 1450. To acquire your Certificate of Release, you need to carefully read the information and follow the instructions.  Dealing with federal tax debt can be an extremely frustrating and difficult process. It requires that you pay off all your outstanding debt or successfully negotiate payment terms suitable to both parties.  At that point, you can request a Certificate of Release that removes the tax liens on your property.

When Does a Federal Tax Lien Start?

First, the IRS must determine that you have a balance due in unpaid taxes.  Next, it will send you a bill that explains how much you owe.  The IRS issues automated balance due notices on a regular basis, usually every 4-6 weeks. The notification will include a total repayment amount for your balance as well as payment instructions. Technically, the IRS can place a tax lien on your account when you do not respond to the first notice of the balance due or you fail to pay the entire balance listed on the notice.

Ultimately, if you neglect or refuse to fully pay the debt, the IRS files a public document known as a Notice of Federal Tax Lien.  This is a public filing to alert creditors that the government has a legal right to your property. The notice reads, “There is a lien in favor of the United States on all property and rights to property belonging to this taxpayer for the amount of these taxes, and additional penalties, interest, and costs that may accrue”.

The filing of the notice might cause serious financial problems, such as making credit more difficult to get. However, there are two immediate options for dealing with this situation.  You can pay the IRS the sum owed in past taxes or file an Offer in Compromise. You cannot release this lien without satisfying your outstanding debt. If you are not eligible for an Offer, you can set up an Installment Agreement to pay your taxes over time.

IRS Notice 1450 – Step 1: Requesting a Payoff Amount

IRS Notice 1450 instructs you on how to obtain a payoff amount of your past-due tax balance. There are several ways you can obtain your balance.

  • Contact the IRS office by phone – You can contact the IRS office that is assigned to your account (which will be noted on the notice). You will be able to talk with an agent and receive the amount due over the phone.
  • Use your online IRS Account – The quickest and easiest way to get your balance is to go to IRS.gov and log into your online account. You must authenticate your identity to open the account, but once you do, you will have complete access to your tax information and outstanding balances.
  • Contact the Centralized Lien Operation – The Centralized Lien Operation offers a dedicated phone line (1-800-913-6050).  This number has shorter wait times than the standard IRS phone line. You can consult with an agent about your account.

IRS Notice 1450- Step 2: Getting Rid of an IRS Tax Lien

To remove the IRS Tax Lien from your account, you must fully satisfy the balance due. There are several ways that the lien may be satisfied.

  • Discharge of property – You can request that a tax lien be removed from a property.  For example, it can be transferred to a new owner without the burden of a lien. Before granting the discharge, the IRS will carefully analyze the selling considerations. If you sell the property, the IRS will ask for a percentage (or all) of the earnings to satisfy your sum owed.
  • Subordination – The tax lien is not removed by subordination. However, this means that the debt is pushed lower on the priority list. Assume you have an IRS tax lien on your house and want to refinance to get a cheaper interest rate. You will have to convince the IRS to agree to subordination with a new mortgage. If you failed to pay your outstanding tax bill and the house was in foreclosure, the mortgage company would not agree to give a new mortgage if they were secondary to the IRS.
  • Withdrawal – Under certain conditions, the IRS will withdraw a tax lien. If the balance is paid in full, a payment plan is in place, or you have made an offer in compromise.  Another option is to wait until the collection period has elapsed.  The IRS has ten years to collect outstanding taxes.

Reasons the IRS Will Withdraw a Federal Tax Lien

There are a number of avenues available to satisfy a federal tax lien.  As a result, the IRS will remove or withdraw a federal tax lien from your property for a variety of reasons. The IRS has ten years to collect unpaid taxes. The IRS tax liens contain text stating that the lien will terminate when the 10-year collection period has expired.

Satisfying a Federal Tax Lien

  • Full payment is made – You can pay the remaining debt in full.  Then, the IRS will remove the tax lien from your property within 30 days of receiving payment.
  • Set up a  payment plan – Setting up a payment plan allows you to pay your tax bill on a regular basis. If you make timely payments on your balance, the IRS will remove the tax lien. You must set up a Direct Debit Installment Agreement.  This gives the IRS permission to withdraw money from your account automatically each month. This arrangement stays in place until the sum is paid in full.
  • Guarantee your payment with a bond – You can buy a bond that guarantees you’ll keep paying the IRS. You are still responsible for repaying the debt.  However, in this situation, the bond issuer guarantees that you will do so. You must pay for the bond issuance, which raises your total cost.  But, the bond allows you to request that the IRS remove the tax lien on your property immediately.
  • Negotiate an Offer of Compromise – Using an offer in compromise, taxpayers can settle their existing tax liability for less than the whole amount. The amount of the offer in compromise is based on what the IRS believes they can reasonably collect. Once you pay off the full amount of the offer in compromise, the IRS will remove the tax lien.  Or, they may set up a payment plan for that amount.

Statute of Limitations Requesting Certification of Lien Release

Except in cases of fraud, the IRS has 10 years to collect any sums owed on your account. A tax lien is worded so it states the lien will automatically expire when the 10-year collection period expires. The ten-year period begins when the assessment is given, not when the tax return was originally due.

Tax Lien vs. Tax Levy

If you neglect or fail to pay a tax bill, the government has a right to make a legal claim over your property. They can do this in the form of a federal tax lien. The government’s interest in all of your property, including real land, personal property, and financial assets, is then protected by this lien.

When the IRS assesses a tax against you and sends you a bill that you ignore or refuse to pay, a federal tax lien is created. To notify creditors that the government has a legal right to your property, the IRS files a public document known as the Notice of Federal Tax Lien. If the IRS notifies you of its intention to file a Notice of Federal Tax Lien, you have the opportunity to file an appeal.

IRS Tax Lien

A tax lien is a legal claim made against property that you own that restricts you from selling it without first notifying the lien holder. A tax levy indicates that the IRS can eventually confiscate (and sell) your property to satisfy all or portion of your outstanding sum.

IRS Tax Levy

A levy is a legal seizure of your property in order to pay a tax debt. Levies are not the same as liens. A lien is a legal claim made on your property to secure payment of your tax debt, whereas a levy actually takes possession of the property to repay the tax bill. Tax levies are far more uncommon than a tax lien.  They are normally only utilized when filers owe large amounts of money but own luxury items with high resale value. This is the most prevalent reason for a tax levy.  However, the IRS has the authority to seize any form of real or personal property to fulfill your tax liability.

IRS Notice 1450 – Frequently Asked Questions

Most IRS tax liens are released within 30 days of the account being paid in full.

What if I Need a Certificate of Release Immediately?

If you require a Certificate of Release immediately, you should go to your local tax office. You must include proof of payment, identification, and a statement explaining why you require the Certificate.

If the lien has not been discharged after 30 days, you have two options. You can get in touch with the Collection Advisory Group or go to your nearest IRS office.

You can check the status of your lien using your online account at IRS.gov.  Alternatively, you can call the IRS to get a status update.

IRS Notice 1450 is automatically issued when you have a tax lien on your account or have had one in the past.  It informs you that a federal lien is in place and tells you how to satisfy the debt to remove the lien.

After ten years, the IRS is required to release the lien, whether you paid or not. The language included in the original lien is worded so that it automatically expires after ten years.

Up Next: IRS Cycle Code – Deciphering IRS Transcript Cycle Code 2022-23

IRS Cycle CodeIRS Cycle Code is an eight-digit number appearing on an IRS tax transcript that identifies the processing cycle and timelines for a tax return. There are no guarantees when it comes to the IRS and receiving your tax refund.  The IRS claims 90% of returns are processed and completed within 21 days.  While that may be true, the remaining 10% are often left wondering, speculating, and guessing. However, there is information available to taxpayers ciphered into the IRS cycle code on their IRS transcripts.  While not apparent at first glance, once deciphered the IRS cycle code on your tax transcript can assist you in determining the direct deposit date.

If you have ever attempted to understand your tax transcript, you may have spotted the eight-digit code. This code is more than just a seemingly random collection of numbers.  It can actually assist you in determining when your return was entered into the IRS Master File.  Moreover, it can help you estimate when you might receive your refund. While this is a useful guide for 2022-2023, it does not account for unforeseeable delays.  There are many other reasons why the IRS may postpone your refund.  Nevertheless, learning to decipher your transcript cycle code can be helpful for narrowing down when you might receive your tax refund.

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