A lien is a legal claim or right against someone else’s property, usually for the payment of a debt. The IRS can place a lien on your property if you owe taxes and have failed to pay them. This can be a very stressful and difficult situation to deal with, but it is important to know your rights and options if you find yourself in this situation.
If your situation with the IRS has gotten to this stage, it's time to contact a tax professional. They can help you to determine what your options are in dealing with the IRS to minimize their impact on your life.
When does the IRS File a Lien?
The IRS has the power to issue a lien when taxpayers fail to pay back taxes, which must be paid within 10 days of the IRS sending the taxpayer a final notice of intent to levy. If you fail to pay the taxes within 10 days, the lien will be automatically filed with the County Recorder’s office. The IRS may also issue a lien when a taxpayer fails to respond to an IRS request for information or fails to make an installment payment promised under a payment plan. A lien might also be issued if the taxpayer violates the terms of an offer in compromise or fails to provide information the IRS is requesting to verify a claim of innocent spouse relief.
After the IRS files a lien, what happens?
When the IRS files a lien, it will make a public record of the lien and its amount. This will be included on your credit report, which means that your credit score will be affected. The IRS will send you a letter, called a Notice of Federal Tax Lien, detailing how much is owed, when it is due, information about payment options, and how the lien affects your rights. The IRS may take other collection actions such as wage garnishment and seizing funds from your bank accounts.
While the IRS has the right to seize and sell your property, they only take that action in extreme cases. They do not want to have the cost of the seizure, securing, and finding a buyer for your stuff. Instead, they would rather wait and seize any proceeds should you sell your property.
How can I get rid of an IRS Lien?
The most effective way to get rid of an IRS lien is to pay the debt in full. Once the debt is paid, the IRS will remove the lien from the public record. You can also request a withdrawal of the lien in certain cases. This is when the lien is withdrawn, but the debt remains. Generally, your debt must be less than $25,000 or you have a good reason why it is in the government's best interest to make the withdrawal.
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