The federal tax lien provides a powerful tool for the Internal Revenue Service (IRS) to collect overdue taxes. The lien clouds title to property and prevents property transfers or sales and damages credit ratings. Additionally, a lien is filed with your counties recorder of deeds office to be released as public notice that you have an unpaid tax debt. Even if you cannot pay your tax debt in full there may be answers to dealing with the lien.
How to Get Rid of a Federal Tax Lien
1. Paying your tax debt in full. The IRS releases the lien within 30 days after you have paid your tax debt.
2. File an Offer in Compromise. The IRS releases the lien when all the terms of the Offer are satisfied.
3. If you owe less than $25,000 and can pay the tax debt in monthly installment payment with full payment made in less than 60-months, the IRS will withdrawal the lien.
4. When conditions are in the best interest of both the government and the taxpayer, other options for reducing the impact of a lien exist.
- Discharge of property — Allows property to be sold free of the lien.
- Subordination — 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 mortgage.
- Withdrawal — Removes the public notice and assures that the IRS is not competing with other creditors for your property.
How a Federal Tax Lien Affects You
- Assets — A lien attaches to all of your assets (such as property, securities, vehicles) and to future assets acquired during the duration of the lien.
- Credit — Once the IRS files a Notice of Federal Tax Lien, it may limit your ability to get credit..
- Business — The lien attaches to all business property and to all rights to business property, including accounts receivable.
- Bankruptcy — If you file for bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien may continue after the bankruptcy.
When you are ready to learn more about what we can do for you, we encourage you to contact us.