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IRS Tax Lien Got You on Lockdown?

If you are facing an IRS tax lien, don’t feel overwhelmed. There are affordable options to help you get relief.

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Tax Lien vs. Tax Levy: What’s the Difference?

Many people use tax lien and tax levy interchangeably, but there is a distinct difference between them. A tax lien is a legal claim against your property in an attempt to secure payment of your back taxes. A tax levy, however, allows the IRS to actually seize your property to satisfy the debt. A tax lien will come into play if you disregard your tax bill or refuse to pay it. When this happens, the IRS will file a public document, the Notice of Federal Tax Lien. This basically tells all other creditors that the IRS has secured a legal claim to your property. Credit bureaus may also include the notice in your credit report.

How to Handle an IRS Tax Lien

The IRS can place a tax lien not only on your existing assets, but also future assets attained while the lien is in effect. Even if you file for bankruptcy, the IRS lien may remain in place. The easiest way to remove a tax lien is to pay your taxes in full. Once paid, the IRS will release the lien within 30 days. If paying your tax debt in full is not possible, you may be able to get relief through one of these options.

  • Installment Agreement

    If the IRS hasn’t filed a tax lien against you yet, you may avoid adverse action by setting up a guaranteed installment agreement ($10K or less) or a streamlined installment agreement ($25K or less). This allows you to make monthly payments over time to pay off your tax debt.

  • Offer in Compromise

    You may be able to reduce your tax debt through an Offer in Compromise. If successful, the IRS will remove the tax lien once the agreed-upon amount is paid in full.

  • Tax Lien Withdrawal

    An IRS tax lien is typically withdrawn when the IRS files a lien against the wrong taxpayer. If you believe a tax lien was filed in error, contact the IRS immediately and request a review.

    Two additional withdrawal options are provided under the Fresh Start initiative.

    The first option allows withdrawal if all of the following conditions are met:

    • Your tax debt is paid, and your lien has been released

    • You have filed all individual returns, business returns, and information returns for the last three years

    • Your estimated tax payments and federal tax deposits, if applicable, are current

    The second option allows withdrawal if you’ve entered into a direct debit installment agreement, and you meet the following eligibility:

    • You are a qualifying taxpayer

    • You owe $25,000 or less (you can pay down the balance to $25,000 prior to requesting withdrawal)

    • Under the agreement, you will pay in full the amount you owe within 60 months, or before the collection statute expires, whichever comes first

    • Other filing and payment requirements are compliant

    • You have made three consecutive direct debit payments

    • You haven’t defaulted on your current or any previous direct debit installment agreement

If you’re dealing with an IRS tax lien, don’t panic. Tax Defense Network can help. Our tax professionals have the experience and expertise to help you find the right solutions for your tax problems. Schedule a free consultation today!

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Common Questions About IRS Tax Liens