"Gary Bode has just completed our tax returns for the first time and I am totally satisfied with his level of service. He has been very attentive, asked all the right questions, and not only fixed some problems from our previous accountant, but also set us up for future success through a thorough and professional analysis of our corporate structure in conjunction with several personal variables.Gary Bode, CPA: Once you receive Form 668(Y), you need professional tax help. If you'd like a free initial phone consult, please call 399-2705.
Form 668(Y), Notice of Federal Tax Lien puts your financial life on hold. Liens establish the IRS’ legal claim to your property as collateral against your tax debt. The IRS now has first “dibs” on some of your assets. Form 668(Y) becomes a public record and the Tax Lien appears on your credit reports, dropping your FICO credit up to 200 points. Potential employers pass you by. While we generally advocate self sufficiency, once the IRS issues Form 668(Y), you need professional CPA help.
What’s the Difference between a Tax Lien and a Levy?
The tax lien established by Form 668(Y) puts a hold on the listed assets, up to the amount on the lien. Eventually the IRS will levy or seize these assets and sell them to satisfy the back taxes due.
Back Taxes – Often Taxpayer’s are due a Refund!
A tax lien, in my opinion as a CPA, is the last attempt of the IRS to gain your attention, generally about taxes due from un-filed returns. Incredibly, once we prepare the back tax returns, a taxpayer refund often exists. Why? On un-filed back tax returns the IRS calculates the taxes due from the revenue information they’ve collected. But they don’t factor in things like legitimate deductions and tax credits. Here’s our prior post on back tax resolution.
“I’m not judgmental about how a client gets ensnared by the IRS. My concern is getting you into compliance as inexpensively and stress free as possible.”
Gary Bode, Wilmington NC CPA and tax accountant
IRS Tax Lien Release
The IRS recently relaxed its tax lien policies. But Form 668(Y) explicitly expresses the IRS has lost patience with you. Common steps we take include:
- Obtaining a release for us to talk to the IRS about you – usually through both Form 2848 and Form 8821.
- Carefully listening to your side of the dispute. We’re your advocate.
- Requesting a delay on the Levy process. Generally the IRS recognizes a CPA needs time to help you satisfy them.
- Gaining a complete understanding of the IRS’ position.
- Checking the IRS figures. They’re not always correct.
- Preparing un-filed back tax returns.
- Understanding your current financial condition.
- Filing Form 12277. Here’s our past post on Form 12277, Application for Withdrawal of Filed Form 668(Y).
- Obtaining a retainer. In these cases we get paid in advance. After all, there is no more powerful creditor than the IRS. Except maybe the local loan shark.
Common Techniques for Tax Lien Release
- Checking that the IRS followed their own rules. If not, the lien must be released.
- Preparing back tax returns to reduce your liability.
- Preparing Form 656, Offer in Compromise. This is the infamous “pennies on the dollar” technique as seen on late night television. An Offer in Compromise, when appropriate, is a powerful tool. Here’s our past post on Form 656, Offer in Compromise and the related Form 433-B.
- Entering into an Installment Agreement via IRS Form 9465. Here’s one of our past posts on Form 9465 and Installment Agreements. You may not even have to pay off the entire amount to have the tax lien released! Or, sometimes, not even provide a collection statement.
- Paying off Form 668(Y) in full. A good trick that requires careful financial planning.
- Allowing the IRS to seize the liened assets.
- Asserting that withdrawal of the lien will speed collecting the tax.
- Asserting that withdrawal would be in your best interest (as determined by the Taxpayer Advocate), and in the best interest of the IRS.
IRS Information on Form 668(Y)
- Publication 783, Instructions on How to Apply for a Certificate of Discharge of Property from a Federal Lien.
- IRS Publication 784, Application for Subordination of Federal Tax Lien.
- Publication 1450, Request for Release of Federal Tax Lien.
- The IRS website provides a nice over view of Form 688(Y) and associated issues.
We’re a CPA firm in Wilmington NC but serve a Wider Geographic Base through our Virtual Office
IRS Form 668(Y) deserves competent CPA attention, which may not be available locally. Our virtual office serves national and international clients. Call us for a free initial phone consult at (910) 399-2705.
