Tax Liens 101

This is part 4 of our series on common tax problems – you can read parts 1 (Wage Garnishment), 2 (Bank Levies) and 3 (License Sanctions) here.

We get quite a few clients who come to us with questions about tax liens – a kind of mortgage the IRS can put on your property if you haven’t paid your taxes. In other words, the IRS makes a legal claim to your property as security for tax liability.

Practically speaking, the lien ties your property down to protect the government’s portion of your money: you’ll be unable to sell until you deal with the tax issue. Liens also show up on your credit report, and can keep you from getting a loan or taking out a line of credit.

Fortunately, there’s hope! Our team of lawyers can work with the IRS to help get your tax lien released (and erased from your credit report). Here’s a quick overview of what you can expect if you’ve received a tax lien filing – and what we can do to help.

How Tax Liens Work

A tax lien is usually triggered when the government decides they may have difficulty collecting the amount of taxes you currently owe within the statute of limitations (10 years). Typically, you need to owe at least $5,000 before the IRS issues a tax lien.

Tax liens involve several steps:

• Assessment for liability (the IRS determines that they need to file a lien)
• The IRS serves you a notice and a demand for payment
• You fail to pay the debt within 10 days of notification.
• The IRS issues the lien.

Obviously, the best solution is to pay off your outstanding tax debt immediately when you receive the notice and the demand for payment! (And you should also contact us immediately if you receive one of these communications.) If immediate payment is not possible, however, you still have plenty of options.

How We Can Help

There are a number of ways that we can work with the IRS to release your tax lien. We can help you set up an installment plan or an Offer in Compromise, and obtain a lien release commitment in exchange for payment. We can request a certificate of subordination to another creditor, or negotiate for a partial release or a withdrawal.

Typically, a lien remains on your credit report for seven years, but we can help you negotiate the IRS Fresh Start program to get the record wiped clean. If a lien is properly withdrawn and reported, Experian will delete it from your credit score.

All these options require timely communication via written requests and proposals. It’s more than just paperwork – it’s an ongoing appeals process. Our tax lawyers know how to negotiate the mounds of paperwork to get rid of your tax lien – we have lots of experience!

If you’ve received a tax lien notice, or if you have any questions about how liens work, you can give us a call at 844-841-9857, or schedule a free consultation here.