Tax Liens in Rainbow City, Alabama
In Rainbow City, Alabama, a "lien" is a security interest placed on a piece of property, typically land or a house, to secure the payment of a debt. It usually gives a creditor the right to take ownership of any equity that exists in the property, to secure the payment of the debt. If the owner sells the property, the creditor may also be entitled to the proceeds of the sale, up to the amount owed. It can also give the holder of the lien a higher priority status, giving them an advantage over competing creditors, if the debtor files bankruptcy.
As you might have gathered, a "tax lien" is simply a lien placed on property by the IRS or Rainbow City, Alabama tax authorities, to gather taxes that the property-owner has failed to pay.
Of course, a tax lien in Rainbow City, Alabama isn't worth much more than the paper it's printed on if the debtor doesn't own any property of value, on which a lien could be placed. However, a tax lien applies to property that the taxpayer obtains even after the lien is created. Apparently, this makes it quite a bit easier for the government to collect its taxes.
Tax Lien Procedure in Rainbow City, Alabama
In Rainbow City, Alabama, the procedure for imposing a tax lien is relatively simple. First, the IRS makes a determination that a person is delinquent in their tax obligation.
At this point, the taxpayer will receive a letter containing a "notice and demand," which, as the name suggests, gives notice that the recipient owes taxes, and demands immediate payment. It will typically give the taxpayer about 10 days to pay the demanded amount.
If that time period expires, and the debtor still hasn't paid, the Alabama tax lien will go into effect automatically, with no further action required.
However, if the federal government does not seek to enforce a tax lien in Rainbow City, Alabama within 10 years of imposing it, federal law dictates that the lien automatically expires. This is effectively a statute of limitations on a tax lien, meant to encourage the federal government to collect its taxes in a reasonable period of time, and ensure that property is not encumbered by a lien forever.
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How Can a Rainbow City, Alabama Tax Lien Lawyer Help?
If you are notified by the government that you owe back taxes in Alabama, and that they are going to pursue a tax lien to collect their money, things can get very intricate, quite quickly.
Accordingly, it's important that you contact a tax attorney in Rainbow City, Alabama to ensure that whatever legal rights you have in this situation are protected. Your attorney will also be able to advise you on how to best deal with the situation.