By: Law Office of Ray Haselman

What Is an IRS Tax Lien?

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The IRS defines a federal tax lien as the government’s legal claim against your property if you neglect or fail to pay a tax debt. This lien protects the governmental interest in all owned property, including real estate, personal property, and financial assets.

The IRS may place a lien after they put your balance due on the books, send you a bill that explains how much you owe (a Notice and Demand for Payment), and you have neglected or refused to pay it on time fully.

A lien is often confused with a levy. A levy is when the IRS takes the property in order to pay your tax debt. A lien merely secures the interest in the property. If you don’t take care of taxes owed or make arrangements to settle the debt, the IRS can levy your property, seize it, and sell it.

How Do You Get Rid of a Lien?

Other than paying your tax debt in total, there are ways to get rid of your lien if conditions are in the best interest of both you and the government.

  •  You may be eligible for a property discharge that would remove the lien.
  •  You can request subordination. A subordination doesn’t remove the lien but allows creditors to move ahead of the IRS, possibly making it easier to obtain a loan or mortgage.
  • You may request a withdrawal to remove the public Notice of Federal Tax Lien, which assures that the IRS is not competing with a creditor for your property. This option does not release your liability for the debt owed.
  •  Speak with a qualified tax attorney who may be able to assess your situation more specifically

How Does a Lien Affect You?

An IRS Tax Lien can affect you in several ways. A lien attaches itself to all your assets, such as property, securities, and vehicles; all business property and rights to business property. After the IRS files a Notice of Federal Tax Lien, getting credit may be challenging.

Often people try to remove themselves from dire financial situations by filing bankruptcy, sacrificing the time it takes to remove from your economic history for a clean slate. However, after filing bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien may persist after filing bankruptcy.

What Can You Do to Avoid a Lien?

Help is available if you are in a situation where you can foresee the IRS requesting a lien on your property. Amongst other things, you can:

  • Pay your taxes in full and on time.
  • Contact a tax attorney in order to help you fully understand all of the options available to you.
  • Resolve basic and routine lien issues by contacting the Centralized Lien Operation.
  • Contact the Office of Appeals.
  • Contact a Collection Advisory Group.
  • Ask for assistance with the Taxpayer Advocate Service.
  • Notify the Centralized Insolvency Operation if your bankruptcy has changed your tax debt.
  • Contact the IRS directly.

If you need assistance, give us a call at 786-522-0410.