IRS Tax Liens

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An IRS lien is a legal claim by the government against your property when you fail to pay a tax debt.

What is an IRS Tax Lien?

A federal tax lien is the government’s legal claim against your property, including real estate, personal property, and financial assets, when you neglect or fail to pay a tax debt.

The purpose of a tax lien is to protect the government’s interest in your property and alerts creditors that the government has a legal right to your assets.

A lien is different from a levy. While a levy allows the IRS to seize your property, a lien is a claim against your property to secure payment of the tax debt.

How Does an IRS Lien Work?

1. Assessment: The IRS assesses your tax liability and sends you a bill (Notice and Demand for Payment)¹.
2. Failure to Pay: If you neglect or refuse to pay the debt in time, the IRS files a public document, the Notice of Federal Tax Lien, to alert creditors¹.
3. Impact: The lien attaches to all your property and rights to property, including property you acquire after the lien arises

Effects of an IRS Lien

• Credit: It can significantly impact your credit score and make it difficult to obtain credit.
• Property: You cannot sell or refinance your property without addressing the lien².

Resolving an IRS Lien

1. Full Payment: Paying your tax debt in full is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after you have paid your tax debt¹.
2. Discharge of Property: This removes the lien from specific property. Eligibility is determined by several Internal Revenue Code provisions¹.
3. Subordination: This does not remove the lien but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage¹.
4. Withdrawal: This removes the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property. However, you are still liable for the amount due¹.

Avoiding an IRS Lien

• Timely Payment: The best way to avoid a lien is to pay your taxes on time.
• Installment Agreements: If you cannot pay in full, consider setting up an installment agreement with the IRS¹.

If you have more specific questions or need assistance with an IRS lien, consulting with a tax professional or an IRS representative can provide personalized guidance.

For More Information:

Understanding a federal tax lien | Internal Revenue Service

Understanding IRS liens and their implications can help you manage your tax obligations more effectively. If you find yourself dealing with a lien, CONTACT US IMMEDIATELY.