Business owner forgets to update address, unable to contest tax lien

A business owner moved his business and failed to properly notify the IRS. Instead of filing Form 8822-B, he notified the post office and asked them to forward his mail to his new address. A year after the move, the IRS sent the owner notification of a tax assessment. When the owner did not respond, the IRS issued a lien for the unpaid taxes.

The owner attempted to challenge the IRS collection matter, arguing that the notice for the lien was not officially received. Ultimately, the court sided with the IRS finding the agency need only send the notification to the last known address. Actual receipt, according to the court, is not necessary.

The lesson: take the time to update your address with the IRS. Filing a Form 8822-B can help avoid this issue. However, remedies may be available for those that find themselves in a similar situation.

What exactly is a federal tax lien?

A federal tax lien, according to the IRS, is "the government's legal claim against your property when you neglect or fail to pay a tax debt." In order to claim that you owe payment, the government must assess whether or not you are liable for the debt. One way this is done is by conducting a tax assessment.

Next, the agency will send a bill. This bill is called the Notice and Demand for Payment. If you do not pay this bill, a tax lien can be instated. If a lien is applied, it can negatively impact your assets, credit and business.

It is important to note that a lien is not a levy. A levy occurs when the government actually seizes the property.

What do I do if I receive a federal tax lien?

Although it does not happen often, an IRS tax lien could be wrong. This was highlighted just a few years ago by Dionne Warwick. The diva was able to have a tax lien of over $1 million officially revoked by the IRS.

Removing an IRS lien can be done in a few ways. The first is to pay the tax or post a bond that guarantees the tax will be paid at some future date. If you wish to challenge the lien, you can file a suit.

Navigating through IRS collection issues like a tax lien is a complex endeavor. If you or your business is fighting a tax lien or other collection issue, contact an experienced tax attorney to help you efficiently resolve the issue and better preserve your rights.