IRS Tax Liens
How to Release a Federal Tax Lien
What is a Federal Tax Lien?
The Internal Revenue Service is allowed under federal law to place a tax lien on your personal property, real estate, bank accounts and personal possessions to settle back taxes. The tax lien allows the IRS to make a legal claim against your property and assets. The tax lien will include property or assets which are acquired after the tax lien is in place. The IRS is legally allowed to issue a tax lien if:
- 1. The IRS has assessed the liability of the tax debt.
- 2. The IRS has sent you a Notice and Demand for Payment. This notice will alert you to the full amount of the tax liability.
- 3. You have failed or refused to pay the full tax debt with in ten days after you receive the Notice and Demand for Payment.
The Internal Revenue Service also may record the lien using the Notice of Federal Tax Lien. This notice will notify all parties interested in purchasing your assets or lending money to you that the IRS has put a tax lien on the property. In addition, all tax lien notice information will be distributed to the credit reporting bureaus and will negatively affect your credit score. Tax liens may also make it difficult to get a loan, credit card or a line of credit.
Notification of the lien will establish the Internal Revenue Service as the priority creditor in the case of bankruptcy or sales of your assets or property.
How to Release a Tax Lien
The Internal Revenue Service will release a Notice of Federal Tax Lien if you do the following:
- 1. If you pay the full amount of the tax debt, interest, and penalties, the IRS will remove the tax lien with in 30 days.
- 2. If the IRS agrees to accept a bond which guarantees the payment of the tax debt, the IRS will remove the tax lien with in 30 days.
There may be additional fees which have to be submitted with payment to release a tax lien. Fees can vary by state or jurisdiction. Unfortunately, the full amount of the tax lien will stay on the public record until the IRS receives the IRS tax debt payment payoff. The IRS will provide you with an updated tax lien balance if you call their office at 1-800-913-6050. All tax lien settlement amounts will be listed on a letter sent to you.
After ten years after the tax lien is applied to your property, it will automatically be released if the IRS fails to file it again. If the Notice of Federal Tax Lien is not released at the appropriate time, either through negligent or intentional actions, it is possible for you to bring a suit against the federal government.
How to Withdraw a Federal Tax Lien
It is possible to have a Notice of Tax Lien withdrawn under certain circumstances. Any questions about withdrawing tax liens should be directed to an Enrolled Agent, Certified Public Accountant (CPA) or Tax Attorney, but in general it may be possible if:
- The tax lien was not filed properly or if it was filed too soon.
- The IRS has agreed to allow you to use another tax settlement option such as an installment agreement to pay the IRS debt.
- The IRS determines withdrawing the tax lien will speed up the collection of the IRS tax debt.
- The Taxpayer Advocate determines that withdrawing the tax lien is beneficial for the taxpayer and the federal government.
The IRS will send you a written copy of notice if the tax lien withdrawal is made and they will also send other copies to other businesses or agencies per your request.
Appealing a Federal Tax Lien
The Internal Revenue Service is required by federal tax law to give notice with in five business days of filing an IRS tax lien against you. There are several methods of legal notification including contacting you in person, at your home or sending it by registered mail to your last known residence.
It is possible to request a hearing with the Office of Appeals by filing a request at the office listed on your tax lien notice. You may also request a review of your case with a manager. There is a deadline date for filing your tax lien appeal and this date is listed on your tax lien notice.
If you are granted an appeals hearing the IRS Office of Appeals will decide if the tax lien is justified or they may decide to release the tax lien. After the determination you will have 30 days to contest the determination decision made by the Office of Appeals. An Enrolled Agent, CPA or Tax Attorney can help with all issues regarding tax liens and provide information about how to appeal your tax lien.
There may be several arguments you can use to support your case to withdraw your tax lien including:
- All of your IRS tax debts have been paid prior to the filing of the tax lien.
- You have filed for bankruptcy and the IRS filed the tax lien during an automatic stay.
- The taxes assessed are incorrect or the IRS did not follow proper procedure.
- The statute of limitations to collect the IRS debt has expired.
- You were not given the appropriate opportunities to dispute the IRS tax debt amount.
- You would like to discuss other IRS tax settlement options.
Finding Help For Your Tax Problems
If you fail to pay your local or federal government taxes, the IRS has the legal right to place a lien on your businesses, real estate, bank accounts and your home. The tax lien will make it difficult to continue to get loans, sell your assets, refinance a mortgage, and negatively affect your credit score.
It is important that you find someone with knowledge of how the systems work to help you settle your tax debt. You must also trust that the person has only your best interest at heart. Like the old saying goes, "nothing is certain but death and taxes", and the government is going to find a way to get their money from you. You must also be honest with your advocate. No one can get out of trouble with the tax man if you are not up front and honest with them.
If you need help with your tax problems, contact us and we will put you in touch with an Enrolled Agent, Certified Public Accountant or Tax Attorney near you who can review your situation and provide you with the advice you need.