Article Summary: Business Tax Liens: What You Need to Know | Manta

By Gerri Detweiler, Head of Market Education, Nav - November 15, 2016

I've summarized the full article for you capturing only the key points.  If you would like to read the full article click at the link at the bottom of the summary -- Eric Gall

Key Takeaway:  Tax liens can have a big impact on your business credit scores and your ability to get financing. Learn what it means and what you can do about it.  They can also kill a deal if you are selling your business!

You can have great credit scores, make on-time payments, have sizeable credit history, and low debt utilization and be denied credit due to a business tax lien.

What is a Tax Lien?

• A federal tax lien alerts creditors the IRS has a legal right to your property because you failed to pay a tax debt.
• The IRS sends a “Notice and Demand for Payment” stating you owe taxes. 
• If not paid, the IRS will file a “Notice of Federal Tax Lien,” a public record.
• Tax liens can be supplied to credit reporting agencies.

How a Business Tax Lien Affects You

• A business tax lien indicates your business cannot pay its taxes.
• This indicates your business likely has financial problems.
• A business tax lien will cause your business credit scores to drop. 
• It shouldn’t affect your personal credit scores; contact your attorney if it does. 

What You Can Do About a Business Tax Lien

• Pay off your business’s tax debt. 
• Once paid the IRS will “release” the tax lien within 30 days.
• This won’t necessarily remove the public record. Apply to have it withdrawn, if:
• If you and your business are in compliance for 3 years of tax filings.
• You are current on your tax payments and federal tax deposits.
• Can’t pay yet? Here are your options:
• If you owe $25,000 or less, installment agreements are available paid within 5 years automatically deducted from your bank account. You can apply to have the notice removed after 3 payments.
• Obtain a subordinated loan to pay off the debt. Your assets will become liened by the lender vs. the government.
• Send the business credit reporting agencies a copy of the IRS document stating that the lien was withdrawn to remove the lien from your reports.
• It has to be verified and can be a lengthy process.

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com.