If you receive a Notice of Federal Tax Lien, you need the best tax lawyer you can find. Federal tax liens prevent you from borrowing any money in most cases. An IRS lien makes it harder to rent an apartment, get a car, or obtain any kind of credit. An IRS Lien can even jeopardize your job!
What is a Federal Tax Lien?
If you fail to pay a tax debt, the IRS can place a federal tax lien against your property. This is done by filing a public document called a Notice of Federal Tax Lien to alert creditors that the government now has a legal right to your property.
The IRS may file a federal tax lien against you when the IRS assesses a tax against you, sends you a bill, and you neglect or refuse to pay it.
What does a federal tax lien attach to?
The federal tax lien attaches to “all property and rights to property” of the person or entity liable for the tax. This even includes property you buy after the IRS lien is filed! We refer to this as “after-acquired property”. Unfortunately, IRS liens do attach to after-acquired property.
Yes, it’s true! Any property you buy after the lien is filed is still subject to the lien! That is why it’s so important to resolve the lien as soon as possible.
Does a federal tax lien survive foreclosure?
Normally, yes. Unless the lien is paid in a foreclosure, the tax lien will continue to attach to your property. That’s because a IRS liens don’t apply to any specific piece of property. As we stated above, it attaches to “all property and rights to property” including property acquired after the lien was filed.
In other words, if the lien is not paid in the foreclosure sale, the lien would continue to attach to all property you acquire.
Are federal tax liens public record?
Yes! The Notice of Federal Tax Lien is a public document and can be filed in any number of courts or agencies to alert your creditors that the government has legal rights to your property.
Anyone can search these court records to find a federal tax lien in your name. In fact, this is a common type of search when you are buying a house, selling a house, or applying for credit.
Does a federal tax lien affect your credit?
It can. According to the IRS, credit reporting agencies may find the Notice of Federal Tax Lien and include it in your credit report.
This normally isn’t the main issue though. You should be more concerned about how the IRS can use the federal tax lien to facilitate collection. Depending on the size of your debt, the IRS can even try to foreclose on your house!
What’s the difference between a lien and a levy?
A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a legal claim against your property to secure payment of your tax debt, while a levy actually takes the property to satisfy the tax debt.
So in other words, a federal tax lien does not take your property (although it can be used to foreclose on your property later). If you received a levy, rather than a lien, you are in danger of actually losing your property. The IRS can actually take money from your bank account, take your social security payments, or take your car. If you received a levy, call us immediately.
How to remove a federal tax lien
As you can imagine, the best pay to get rid of a federal tax lien is to prevent one in the first place! If you have unpaid taxes, you should consult with us immediately so that you can avoid a federal tax lien entirely! There are a number of ways you can avoid a lien. We can explain your options to you.
If, however, you didn’t consult us first and the IRS has issued a Notice of Federal Tax Lien, we can help with that too.
To start, if the lien was filed improperly, you do have appeal rights. You can contest the validity of the lien through a collection due process hearing. If the lien is properly filed, there are still a number of ways you can release or resolve an IRS lien. We will discuss those options below.
What is a federal tax lien release?
A federal tax lien release is the general term that we use when removing or resolving a lien. An IRS lien release can take many forms:
- An IRS lien can be “discharged” in certain cases. This would remove it from the specific property.
- An IRS lien can be “subordinated”. This does not remove the lien, but would allow other creditors to take priority over the IRS which may allow you to borrow money.
- A federal tax can be withdrawn. This is a complete removal of the Notice of Federal Tax Lien.
When can a federal tax lien be discharged?
A federal tax lien can be discharged where you are selling certain pieces of property. The IRS provides for certain situations in which a discharge may be appropriate.
When can a federal tax lien be subordinated?
We would ordinarily look to subordinate a federal tax lien where you were looking to borrow against a piece of property to pay your tax debt. In other words, you may need to subordinate the lien in order to get a home equity loan which would be used to pay your tax obligation in whole or in part.
When can a federal tax lien be withdrawn?
There are a number of ways to have your federal tax lien withdrawn. The easiest (but not necessarily the best) is to pay your tax in full. In other cases, entering into certain agreements with the IRS can also trigger a lien withdrawal. This can include certain installment agreements or an Offer in Compromise. Depending on your tax situation, these options could be your best approach.
The liens will also be withdrawn if the statute of limitations expires.
When do federal tax liens expire?
Generally, an IRS tax lien lasts for 10 years, or until the statute of limitations on your tax debt expires. While normally the statute of limitations on your tax debt will not exceed 10 years, the statute can be extended if the government files a lawsuit against you. If you have a significant debt, the government can file a lawsuit to extend the statute of limitations or to foreclosure on your home.
Where can I get more information about resolving a federal tax lien?
If you’re looking for more information about resolving your tax debt, including resolving a federal tax lien, you can request a free copy of our book, The Essential Tax Resolution Survival Guide. As part of the ARM Yourself With Knowledge series, this guide aims to help you navigate the tax resolution process and what happens afterward.
Our tax attorneys can help resolve a federal tax lien
We have experience helping taxpayers like you eliminate hundreds of thousands of dollars in tax debt. When we analyze your tax situation, we try to determine the best course of action for you. Resolving an IRS lien is not a “one size fits all” answer. Once we learn more about your case, we can give you the best advice for releasing your federal tax lien.
For example, paying your tax in full will result in a lien withdrawal. You may not be able to (or want to) pay your tax in full. So we would look at other options. Entering into certain agreements with the IRS can also trigger a lien withdrawal. This may be the best approach for you. In other cases, we would look to an Offer in Compromise, lien discharge, or lien subordination. We can review your best course of action with you.
At ARM Lawyers, our tax attorney handles tax cases nationwide and has offices in Pennsylvania, Maryland, New Jersey, and New York. For more information about the tax process in your state, feel free to click below:
- Pennsylvania tax lawyer
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If you received a Notice of Federal Tax Lien, contact us for a free consultation with a tax attorney
An IRS lien can have devastating effects on your life. We get that. We’re here to help. In some cases, we can help to have the lien discharged or subordinated. In others we may be able to have it withdrawn. Call now to schedule your free consultation so we can prevent (or resolve) a Notice of Federal Tax Lien and start you on your path to relief.
Take back control of your financial future. Providing both immediate relief and long-term solutions, tax resolution could be the answer you have been looking for. Our tax attorneys strive to make this process as easy as possible by offering flexible payment options and financing.
Contact our law office today to schedule a free consultation! Call or reach out to your closest office:
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The best part is that we can start the whole process over the phone or by video conference so you don’t even need to come into the office! We make everything as easy as possible for you from start to finish. Call us today.