Removing Tax Liens and Levies

So, the stinking, rotten IRS has placed a tax lien on your real estate, or a levy on your paycheck. What can you do? Well, you have options. You can do one of several things. You need to read and study, then pick the best route for you. Order the materials you need from the book list. The tax collectors have many tricks, but they can be beaten with knowledge and determination.

1. What is a tax lien? A tax lien is a lien like a mortgage lien or a mechanic's lien, which is an encumbrance against real property that runs with the land, i.e. whoever purchases the land also takes the indebtedness. A lien is a claim or hold upon the real property of another as security for a debt that can he satisfied by the property or the sale of it. A lien attaches to all real estate of the debtor (even property acquired after the date filed) in the county where the lien was filed.

A lien holder can foreclose on the property, i.e. put it up for auction and sale on the courthouse steps.

2. What is a federal tax lien? It is a lien against your real estate located in the county in whose courthouse the lien is filed. Regardless of the title or wording of the name of the IRS form used, once it is filed by the clerk of court, it is binding or notice to the world, for six to ten years. Tax liens only apply to real property. If you have none in the county where filed, the lien has no effect unless you buy or inherit some real property in that county. The lien does not cross county lines.

Do not have false hopes due to the misleading words on the federal tax lien form. Once it is received by the clerk of court, it is accepted by the legal community. Also, a federal lien supersedes state law, so you have no protection, homestead or otherwise.

3. When a lien is filed against your house, nobody comes out there and places a large piece of paper across the roof of your home, hut rather a notice is recorded at the courthouse which warns all future buyers and lenders that a lien holder has a prior claim against the real estate owned by you in that county. Normally, prospective buyers of the property will not buy the property unless you pay off the lien and have it removed. Or, the buyer would pay you less than the full price and use the money due you to pay the lien holder. Lenders will not lend money on real estate when notified of a prior lien unless arrangements are made in advance to satisfy the prior encumbrances.

4. Liens and mortgages have a priority system whereby whichever one is filed first has the first claim against the real property and whoever is recorded second can only collect what is left over. Real estate law is explained well in Clarkson's Tax Collector's Manual

However, the buyer or lender does not have to satisfy the lien. A family member could accept the house with all the liens on it. Deeds can still he drawn and filed as property can be sold or transferred with lien on record. Some purchasers will buy land with lien on record.

However, the lien just sits there at the courthouse until it expires unless the tax thieves attempt to foreclose, i.e. sell your property at auction. However, if someone wishes to purchase your home, they could mandate satisfaction of the lien prior to purchase. Yet, if no auction or purchase takes place after six to ten years, the tax lien expires by the statute of limitations unless the tax collector renews the lien. However, such liens are rarely renewed. In 1990, the law was changed to allow the IRS ten years to renew a tax lien. Other liens such as mortgages, mechanic's liens etc. expire at varying times. The statue of limitations can be tolled or extended by several of your actions. However, this extension is not recorded in the deed room and is generally ineffective.

5. The usual procedure of the Instant Robbery Squad is to allow small liens to expire by the statute of limitations and to foreclose on the large ones. However, under the new IRS procedures, the tax thieves are ignoring almost everybody and almost all liens. Therefore, the best course of action today is to do nothing, unless the local IRS agent acts serious. If you receive a Notice of Seizure, Foreclosure or Auction, call Dr. Clarkson immediately.

6. Under the CDPH laws IRC §6320 and §6330, the Instant Robbery Squad cannot foreclose on a lien or use enforcement methods while the CDPH is pending. Therefore, always request your CDPH. You must do this timely and you must follow procedures.

7. Removing a lien from the greedy hospitals. You can do several things, depending on the circumstances:

A. Fight Back! Do not allow a lien in first place. You can stop a lien and beat an audit. See Clarkson video Audit Procedure 1: How to Handle the IRS (video $30, audio $10).

People who file and do not pay are vulnerable to collection activity. We do not recommend this. If you file and do not pay, protect yourself.

B. Do nothing and allow the statute of limitations to run. This is the best course, especially for small liens, but this depends on circumstances. Call Dr. Clarkson.

C. Pay the lien off. This is the worst option. Do not do it unless it is absolutely necessary.

D. File a quiet title action. This works for a small number of people in certain circumstances. This is not a panacea and does not work for everybody.

E. File a tax refund suit. This is what Dr. Clarkson recommends, but even so, it only works for a few people. See below.

F. Deed the property to wife or children to protect yourself against greedy hospitals, creditors, tax thieves and nursing homes. See our section on Elder Law. This will stop future liens in most but not all circumstances. Deed to wife is ineffective in community property states (i.e. Western USA ) unless you dissolve the community property status.

G. File bankruptcy. This works great, except for liens on real estate, which are secured debts, which are not erased by bankruptcy. However, a Chapter 13 (wage earner plan) or Chapter 7 Discharge can slow and temporarily halt a foreclosure auction.

H. Allow foreclosure. If all looks hopeless, or you want to move anyway, allow the loan company to foreclose. You can stall and delay the mortgage for years and live in the house without payments or rent. Put that money aside or buy silver rounds. When you have to move after 2-3 years, take your savings and buy a new house. We do not recommend this unless absolutely necessary.

Under the Taxpayer Bill of Rights, the IRS cannot foreclose unless the value of the house is about 20% plus 10% greater than the mortgage, i.e. the forced - sale value. Therefore, do not make mortgage payments and drive up the value of the home mortgage which has priority over liens filed afterward. Unfortunately, under the new regulations, few lenders will allow you to do this.

If the bank brings the foreclosure, the tax collector can collect nothing, depending on the amount of your home equity. It is true that you can delay sale and auction of your home for years, but that is hard work.

I. Property taxes are super-priority and can bump mortgages and tax liens. If you do not pay county real property taxes, the county or city can sell your house free and clear of liens, i.e. take all the money and lien holders collect nothing. Of course, the mortgage holder would bid in their note and thus protect their interests.

The tax lien holder can legally do that also, but does not do that, as the IRS cannot gain permission from national headquarters to enter a bid.

Thusly, the county auctions your home, your friend or relative bids it in and the IRS loses their money. Simple, but do not do this without legitimate legal advice. Call Dr. Clarkson.

J. Foreclosure on yourself. If you have a mortgage you can use that to bump IRS out. Hard to do, but effective. Follow Dr. Clarkson's advice carefully here.

8. You need to read and study. Tax liens are a difficult area of the law. However, the material is not hard and only takes a lot of time to study and understand. We recommend the following material:

A. Tax Collector Manual -- the actual training and instruction manual for tax collectors. Best explanation in clear and simple language of how collection and lien system of IRS operates. Essential information. $8 for Book I, II or III; $20 for set of all three books. Note: Bankruptcy on the IRS Book III of the Tax Collectors Manual explains in simple language how to discharge tax debts by IRS. $8.

B. Judgment Proofing. The Clarkson 2-part series that explains how you can protect your property from the thieving tax collector. These describe IRS collection procedures and the steps you can take to stop them. These are available on DVD or VHS for $30 each.

IMPORTANT—Real estate has particular legal requirements. Be careful. Do not take advice from friends and associates no matter how well meaning they are. Follow advice of Dr. Clarkson or a real estate lawyer, only.

C. Law Dictionary by Gifis. A good, full explanation of the terms you will see. Used by lawyers and judges. $30

D. Silver and Gold Explained. The Clarkson video that best explains a safe and secure saving system that is outside the reach of the tax thieves. Proven successful. Video $30, Audio $10.

E. Financial Privacy —No Checks. The classic Clarkson video/book that explains how you can escape the tyranny of the IRS and Federal Reserve System. Operate your business without a bank account. Video $30, Audio $10, Book $10.

All of these resources are available from the Patriot Bookstore.

Note: you can also borrow books on bankruptcy from the public library.

9. The levy on bank account. Since the banks/Federal Reserve/IRS are all the same thing, we can do little here. The IRS just switches your money from their joint account with you in their bank to their account in the same bank. It's gone and irretrievable, except with quick bankruptcy.

Under the new law, the IRS can place a hold on your account for twenty days, during which you can make a deal with the IRS. Then they will remove the hold. Best to never deal with those tax thieves, but a fake OIC or fake cooperation can remove the hold on your account.

However, you are not required to maintain a bank account—so close out all those in your name. If you have any connection to any bank account, even just a signature card, the IRS can steal it (or really, just transfer it).

The Patriot Network strongly recommends that you do NOT have a bank account or any connection with one. See Financial Privacy—No Checks.

The only effective way to protect your money in a bank account is to withdraw all funds. You can invest your savings in silver and gold. See Clarkson video Silver and Gold Explained, mentioned above.

If you feel you must have a bank account, you can open a foreign bank account (see Financial Privacy— No Checks, above), or have a friend or relative open an account in their name with no connection to you. Then they can hand you a package of pre-signed checks. However, this is not recommended. See Judgment Proofing, above.

10. These levies, as most, are not continuous and do not apply again unless the IRS sends a new levy form. However, most financial institutions ignore this provision of the law.

11. Brokerage Accounts and Investment. The IRS can steal these easily, if they bother to. It may take the tax collectors a while to levy these, but once they do, there is not much we can do. Actually, they frequently do not find brokerage accounts and almost never find other types of investments and receivables.

12. Wage and Salary Levy. The slovenly tax collectors often find your employer and steal your paycheck. This is difficult unless your employer will go along with us. However, you can:

A. Seek refund of what was stolen if you qualify.

B. Ask your company to make you an independent contractor. Then you will have no wages and salary to levy. Many books explain this option.

C. You can work for a labor service company or temporary labor supplier, often called "job shop.” Then the company would send your entire paycheck to the job shop, which would pay you with no levy on them.

The patriot community has several temporary labor companies that can hire you and sell your labor to your company. E-mail Dr. Clarkson for names and addresses.

D. Bankruptcy. You can file bankruptcy and immediately remove wage levies and in some cases make the IRS refund stolen pay. See Bankruptcy below.

E. Exemptions. When your company notifies you of a wage levy, they will give you an IRS form. Read it and you will discover that you can claim your wife and children or dependents. Your exemptions limit the IRS's thieving. You are entitled to a set-off of about $150 per week for yourself or over $650 per month. Also, each dependent, whether real or not, can give you an exemption of about $75 per week or about $300 per month per person. A large family or a part-time job would render the levy ineffective.

F. Wife sues for child support. A child support order has priority over IRS wage levy if filed first. Have your wife steal your paycheck first.

G. Sue your employer. Then they would fire you and you could collect unemployment for six to twelve months. Use this money to go into business for yourself.

H. Change jobs. If you change jobs, the Instant Robbery Squad will seldom find you (unless you claim exempt on withholding. The IRS seldom looks very hard. Your new employer will not know about the levy, which then would not apply. However if you quit your job, your pension etc. may then pay out, which the IRS would steal. Wages and salary levies are continuous, i.e. attached to future pay checks.

If your employer agrees, you can make arrangements for him to fire you and then rehire you a few days later. When he fires you, you are no longer working for the company, your levy is squashed and does not reapply when you are rehired.

13. The Tax Refund Suit. You can sue the IRS and take your case to a jury. The jurors hate the tax collectors and almost always find in your favor. Although, the U.S. Attorney knows what the jury will do and therefore will offer you a settlement that you cannot refuse.

However, to file a tax refund suit, the law requires that you first pay the taxes allegedly due. This is unwise, unless they have already stolen the money. Generally, we can force them to refund to you one-half of what was a stolen, depending on the circumstances. If you were audited or if you ignored a 90-day letter, then the tax refund suit may be the best route. No tax refund suit exists if you go to tax court.

For a tax refund suit, you must file an IRS Form 1040X, available from the IRS or the Patriot Network. The IRS will refund your money in a few months or deny your claim. After the denial or six months, you can sue. Be sure to request a jury trial. The Patriot Bookstore has a packet for Tax Refund Suits. $100, listed on the bookstore order form.

14. Bankruptcy. You can now file bankruptcy on the IRS and wipe out the tax debts for your personal income tax, but not for withholding taxes on employees.

You can file Chapter 7 for a complete and total discharge of debts, including income taxes past due three years.

Or you could file Chapter 13, the wage earner plan, to remove liens and levies and make a few payments for a few years, then a discharge.

We have books and packets for you to use to file bankruptcy by yourself without an attorney. You can also find good books at your public library that explain bankruptcy laws in simple, easy language. Feel free to call Dr. Clarkson if you are a Patriot Network member.

15. Backup and support. The Patriot Network has Dr. Clarkson and his crew of expert paralegals that can help you through the maze of revenue regulations and federal laws. Feel free to contact us for help. However, we first want you to view the Patriot Network introductory video to see what we are doing. Also, you should join the Network and receive the membership services plus attend the Clarkson Law Course.

16. Plead poverty. You can negotiate with the tax collectors and persuade them to remove liens and levies due to hardship. This could be dangerous, so be careful.

When you receive a Notice of Lien or Levy for your local tax collector, you can contact the Revenue Officer on your case. You can explain that you have no assets and no money, yet you have a number of small children. The tax collector has the authority to postpone all collection activities in such cases. However, most will deny this.

17. The OIC: Cut a deal. If you have no sizable assets, the Revenue Officers have the authority to compromise a tax claim. Often they can be very generous. The Patriot Network has negotiated very large reductions. However, the tax collectors want you to fill out a financial statement, which is worse than a 1040 form, along with other forms including past 1040's. Dr. Clarkson does NOT recommend filling out this statement unless it is the last option. After you confess all your personal and private activities, you can ask for a payment schedule to pay your taxes. The IRS loves the monthly payments and will allow almost everybody to use them. Also you can make your Offer in Compromise, which is a request to pay a lesser amount due to your impecunious state. They can and will cut your tax due but only if you beg and surrender all of your rights. Also, the Offer in Compromise can stop or slow your filing for bankruptcy. Dr. Clarkson advises, this as a last resort and even then this does not help some people unless they specifically follow our directions.

18. Illegal or harassment levy. To frighten you, the tax thieves often file illegal liens and levies. If so, you can remove them by writing a few careful letters and contacting your Congressman. See Clarkson's Earnest Letter Writing book.

Often the thieves will file a tax lien prior to issuing the 90-day letter or Notice of Deficiency, a mandatory step. If so, you can sue to easily remove the lien. To scare people, the collection agents will slap seizure notices around. This is illegal and easily overturned. You can put the tax rat in jail if you are willing to push hard enough. You can sue them for $100,000 damages under the Illegal Tax Collection Act IRC §7433.

19. The Taxpayers Advocate (formerly the PRO). You can contact the Problems Resolution Officer in any district office. Some are helpful but none have much authority and most are incompetent. The chief PRO or Taxpayer Ombudsman, New National Taxpayer Advocate is in the IRS national office in Washington , DC . You can file the Taxpayer Assistance Order (Form 911) for an order halting IRS activity. Try it.

20. The 1040X: You can amend old returns by filing a 1040X Amended Return. If the IRS audits a return and you lose the audit, you can restart the audit with the 1040X. Also, if the rotten tax collectors file a tax return for you or audit you for not filing, they will dream up large figures against you. If you do not have any sizeable assets, you can laugh away their non-collectible judgments. However, if they can find a way to punish you, you can beat them with the 1040X.

The amended tax return is also the first step for the tax refund suit. To fill out this form, put down what they say are your figures, then enter the correct ones. This is not complicated. You can hire a tax preparer for this. However, some tax return preparers will try to overcharge you. Shop around to find a cheap one or call the Patriot Network. Or, just attach to the 1040X a copy of old or correct returns.

The important part of the 1040X is Part II on the back. Here, explain carefully what you want. You may not be able to add new figures later. Explain, for example, that the IRS audited you and came up with figures that are incorrect and taxes that are not owed, that you do not owe the taxes because you have children, dependents, etc. You can file as many 1040X's as you wish. Do so.

21. Contractor Payments: If you do not work for wages and salaries but work as an independent contractor, you are not an employee and you receive contract payments. Frequently, the IRS will illegally and incorrectly use a wage levy on contract payments. Your company will honor this immoral act, outlawed even by the IRS, because the payroll department does not understand the law nor care about your rights.

The law provides for continuous levy and seizure of wages and salaries only and nothing else. However, the company will illegally treat a seizure of contract payments as continuous. The IRS law provides that a levy on money due you other than wages and salaries steals only what the company owes you at the time the levy is received, nothing else.

If you have a problem here, the Patriot Network can help.

Note: the information in this Report is updated from time to time in the e-Patriot Cannon E-Zine according to what laws are changed or added. It is very important for you to learn of further strategic developments.

Click here to join the Patriot Network, so we can help you with IRS harassment!

Robert Clarkson is a graduate of Clemson University in economics (1969) and the University of South Carolina Law School (1974). He is one of the South's leading patriotic political organizers. (feb08)