For the next few weeks, we’re running a “Slice of Life” series where we address real-life problems our clients bring us after they’ve filed their taxes (or not). You can read Part 1 – Slice of Life: I’ve Been Scammed!, Part 2 – Slice of Life: I Hate Filing Quarterly, Part 3 – Slice of Life: I’m Running Scared, Part 4 – Slice of Life: I’m Confused, and Part 5 – Slice of Life: I Got Levied of the series.
SLICE OF LIFE #6: A client calls us and asks, “How do you remove a tax lien?”
The short answer: You pay your taxes.
The long answer: Even if you can’t pay the entire debt off right now, we can help you get the lien released in a number of ways. We can help you set up payment arrangements with the IRS (like an installment agreement or an offer in compromise), and in some cases we can get the debt moved to Currently Not Collectible status or help you prove you are an innocent spouse. We may also be able to help you get your lien released through the IRS Fresh Start Program.
It’s also helpful to know some basics about what liens are and what they do.
How Does A Lien Work?
A lien is usually the IRS’s first step to get your attention if you have delinquent taxes over the amount of $10,000. (The IRS has a lovely, long PDF explaining their collections process, which you can read here.)
If you ignore the bill the IRS sends you, called the “Notice and Demand for Payment,” they will file a publicly available lien against your property.
As we’ve explained elsewhere, the lien is basically a mortgage – the IRS lays claim to your assets, using them as collateral for a debt. If you sell your property, the money will go straight to the IRS, not to you. The lien extends to any additional property you buy after having the lien filed.
A lien also shows up on your credit report, and will be public record for banks, creditors, and anyone else who wants to see it. It will wreak havoc on your credit score, and will make it very difficult for you to buy a house or car, apply for a credit card or sign a lease. (It may also keep you from getting security clearance for a government job, or cause you to lose a professional license.)
In order to have the lien released, you have to deal with the debt – either by paying your back taxes, or by proving that you are unable to pay. (We can help you with both of those.)
If the lien doesn’t make you pay up, the IRS often moves on to a levy, which you can read more about here.
Bottom line: The minute you get a bill from the IRS, talk to us. The goal is to start dealing with the debt as soon as possible. As long as the IRS sees that you are making a good-faith effort to deal with the problem, they will be much less likely to move on to a lien or a levy.
If you have questions about a lien, give us a call at 844-841-9857, or schedule a free consultation here.