IRS Tax Liens

The Internal Revenue Service may issue a legal claim against your property when you fail to pay your taxes. This claim is called a federal tax lien and serves to protect the government’s interest in all your property. Your property includes real estate, personal property and financial assets. To secure their claim the IRS will file a Notice of Federal Tax Lien to alert creditors that the government has a legal right to your property. A recorded tax lien gives the IRS’s right to your property over other creditors. The IRS may file a lien even though you set up a installment agreement to pay your tax debt and owe $10,000.

In certain circumstances, a taxpayer may apply for the discharge of a federal tax lien. This may be done to allow a taxpayer to sell property. Also, there is procedure to have the lien subordinated to other debt and creditors so that it is easier for the taxpayer to obtain a loan or mortgage. Taxpayers may also be eligible for the removal of the public Notice of Federal Tax Lien, called a “withdrawal.” The IRS will consider a withdrawal when:

  1. Taxpayer owes $25,000 or less;

  2. Taxpayer must enter into an installment agreement to pay their debt within 60 months (or the expiration of collection statute of limitations) by direct debit from their bank account;

  3. Taxpayer is in full compliance with all filing requirements and any other payment obligations;

  4. Taxpayer has made three consecutive direct debit payments;

  5. Taxpayer has not defaulted on their current or any previous direct debit installment plans.

The lien attaches to all your assets and to future assets acquired while the lien is in effect. The lien may remain even after taxpayer files bankruptcy. If the lien if filed against a business, it will attach to all business property, including accounts receivable. A lien is different then a levy. A lien serves to secure the IRS’s interest in your property. A levy is when the IRS takes taxpayer’s property to pay their tax debt. Taxpayers can check on whether the IRS has filed a tax lien against them by calling the IRS centralized lien unit at 800-913-6050. It is also possible that your state’s Secretary of State website my have a listing of liens filed under “lien filing” or “UCC” search.

If taxpayer owes less than $50,000, we may able to avoid a tax lien with an installment payment arrangement with payments coming directly from taxpayer’s bank account. Our ability to avoid a lien will depend on the taxpayer being fully compliant with filing and other considerations consistent with the above terms of lien withdrawal.

The key in dealing with IRS liens and levies is to maintain contact with the IRS and file the appropriate forms. We have years of experience dealing with liens, levies and other collection matters.

Bowman Law Firm, Gene M. Bowman, Attorney