Failure to make timely payments on an outstanding tax obligation you owe to the IRS can have several unpleasant consequences. One such consequence is an IRS tax lien. Here, we will go into more detail about what a lien is and how you can end a lien.
What Are Liens?
A federal tax lien can be put in place once the IRS assesses your liability, or puts the balance you owe on your taxes on the books. The IRS will then send you a Notice and Demand for Payment detailing how much you owe. Should you fail or refuse to pay the debt in full in a timely manner, then the federal tax lien will be put in place. Essentially, the lien is a way of protecting the government’s interest in your property. This includes your real property, personal property, and financial holdings. A lien is the government’s legal claim against your property.
There are several ways to get a lien on your property removed. The most direct path would be to pay your outstanding tax debt in full. Once your tax debt is satisfied, the IRS will release your lien within 30 days. Many, however, may not be able to pay the tax debt owed in full. In the alternative, you may be able to go on an IRS payment plan. While your tax balance will still accrue interest and penalties until paid in full, allowing the IRS to take a minimum of three consecutive payments out of your bank account via a direct debit installment agreement might persuade the IRS to remove the tax lien from public record. Requesting an Offer in Compromise to settle your tax obligation for less than the full amount owed may also be an option.
Seeking the removal of a lien as promptly as possible can be in your favor for several reasons. The lien will not only attach to all of the assets currently owned by you, but also to any future assets acquired while the lien is in place. It can also attach to your business property holdings, including accounts receivable. The lien can impact your ability to get credit. It can also risk the home sale or refinancing as tax liens can be uncovered during title searches.
Furthermore, a tax lien can take up a significant amount of your time. Having a lien in place means that you will likely have to deal with the IRS automated collection system. You may find yourself spending hours on hold with the call center. On top of this, you may be assigned a revenue officer with whom you will have to meet with for in-person visits.
Failure to clear up a tax lien may eventually result in a tax levy. If you do not pay your taxes owed after a lien is put in place, the IRS may proceed with issuing a Notice of Intent to Levy. This means that the IRS intends to seize your property in order to satisfy your outstanding tax obligation.
San Francisco Tax Attorneys
If you suspect a tax lien is in your future or if you are having difficulty managing an outstanding tax obligation with the IRS, Regal Tax & Law Group, P.C. is here to help. Our team of trusted tax attorneys is available to you to discuss your options. Contact us today.