Federal Tax Liens Ensure Collection of Tax Debt

So, you owe the Internal Revenue Service (IRS) money for taxes. You do not have the money so you decide not to pay any amount toward the debt. After all, it you do not have money, the IRS cannot collect, right? WRONG! The IRS has the power to place a Federal Tax Lien against all of your assets and properties, whether they are financial, personal, business and/or real estate. This is the government’s way of protecting their interest in the event you fail to pay your tax debt in a timely manner. 

Federal tax liens vary depending upon each individual case and situation. If you fail to pay the IRS timely, a lien will be attached to all of your current and future assets until the offending tax issue is resolved. Furthermore, if you do not address a tax debt in a timely manner, the lien can develop into a levy which empowers the IRS to seize any of your assets to pay your tax debt. Assets include cars, personal properties, real estate properties, stocks, bonds, cash, monies in your bank accounts, even bitcoin. 

Since April 2018 all three credit reporting bureaus (Equifax, Experian and TransUnion) stopped reporting liens on their credit reports. This means that Federal Tax Liens should not affect your credit scores regardless of whether or not the lien has been satisfied. However, this does not mean that no one can determine if you have any liens against you. There are other consumer reports on which tax liens may appear since liens are public records. Moreover, the IRS must follow a procedure for collections of a tax debt before mailing out a notice informing you that a tax lien has been filed against you. They will: 1) assess the amount of taxes owed by examining a filed tax return and 2) send a tax bill to your last known address. If you do not respond to the bill notice, the IRS will send out a lien notice. 

The best way to avoid a federal tax lien is to pay your amount of taxes in full. If you have trouble paying the entire amount due to financial stress, the IRS offers a multitude of payment options to avoid liens, levies, and other forms of collections. Some options are:

  • File an Offer In Compromise (OIC).
  • File for Currently Non-Collectable (CNC).
  • Apply for an Installment Agreement (IA).
  • Apply for a Partial Payment Installment Agreement (PPIA).

However, if you have already received a Notice for imposing a Federal Tax Lien against you from the IRS, do not panic. Aside from paying the entire tax debt to the IRS, there are other options:

  • Apply for an Installment Agreement (IA).
  • Apply for a Partial Payment Installment Agreement (PPIA).
  • Apply for Lien Discharge if you pay the tax debt in full.
  • Apply for Lien Subordination.
  • Request a Lien Withdrawal.

Whether you have already received a Lien Notice from the IRS or you believe you may receive one shortly, DO NOT IGNORE IT! Call us immediately to review your options before a bad situation becomes worse. Continue to visit our website to learn more about tax problem resolutions.

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