Federal Tax Lien
What is a Federal Tax Lien?
A Federal Tax Lien affects your financial assets, personal property and your real estate property. Tax liens can vary based upon your individual situation. Furthermore, they are the government’s way of protecting their interest in case you fail to pay your tax debt in a timely manner. Moreover, if you fail to pay the IRS timely, a lien will be attached to all of your current or future assets until the offending tax issue is resolved. Finally, if you do not address the tax debt in a timely manner, the lien may develop into a levy where the IRS has the ability to seize said assets, including bank accounts.
What Are Assets?
Real estate property
(car, boat, motorcycle, etc.)
Does a Federal Tax Lien Affect My Credit Score?
Since April 2018, all three tax bureaus (Equifax, TransUnion, and Experian) stopped reporting liens on credit reports. Consequently, this means that Federal Tax Liens should not affect your credit score regardless of whether or not the lien has been satisfied. However, even if a lien does not appear on your credit report, it still needs to be resolved since it is public record and can appear on other consumer reports.
How Do I Know If I Have a Federal Tax Lien?
The IRS has a filing process before sending out a notice. Therefore, they will:
- Assess the amount owed through a filed tax return.
- Send a tax bill to your last known address.
If you do not pay the tax bill sent by the IRS, then the IRS will send out a lien notice.
How to Avoid a Federal Tax Lien
The best option is to pay the entire tax debt in full. However, if you are having trouble paying the full amount of your tax debt due to financial stress, the IRS offers a multitude of payment options in order to avoid a lien.
Some options are:
Applying for an Installment Agreement (IA)
Applying for a Partial Payment Installment Agreement (PPIA)
Filing for an Offer In Compromise (OIC)
Filing for Currently Non- Collectible (CNC)
Although it may seem like a federal tax lien may be looming, there is always an available option that may help you avoid the Federal Tax Lien altogether. Visit our IRS problem resolution page for more of our services.
I Have Received a Federal Tax Lien Notice, What Do I Do?
First, do not panic! Although this may be your first reaction to receiving a Tax Lien notice from the IRS, it is possible to find a less painful resolution to your tax problem. Secondly, you can pay the entire amount owed to the IRS in full. However, if that is not possible, then there are several other options. Lastly, acting upon or applying for any of the following will help:
- Paying the debt in full
- An Installment Agreement
- A Partial Payment Installment Agreement
- A Lien Discharge
- A Lien Subordination
To learn more about liens, check the following :
Tax Lien Discharge
A Tax Lien Subordination
Tax Lien Withdrawal
In conclusion: whether you believe you may receive a notice from the IRS or you have already received a notice from them, it is extremely important not to ignore it. Consequently, this will only make a bad situation worse. Moreover, you still have several options available depending on your and/or your business’ circumstances. Call us today to discuss your options and the best way to move forward for your specific situation.
Visit our FAQ section for more information on this topic as well as other important topics.