What is a federal tax lien?
When you fail to pay your federal tax liability, the government files a federal tax lien, which is the government’s legal claim against your property. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets. As well, a federal lien puts the IRS first in being paid upon the sale of assets, in the event your liability isn’t paid before.
A federal tax lien exists after the IRS assesses your liability and sends you a bill with the amount due, and a due date. When you don’t respond within the timeline dictated for payment, the IRS then moves to file a tax lien.
The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.
How a Lien Affects You
- Assets — A lien attaches to all of your assets (such as property, securities, vehicles) and to future assets acquired during the duration of the lien.
- Bankruptcy — If you file for bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien may continue after the bankruptcy.
- Business — The lien attaches to all business property and to all rights to business property, including accounts receivable.
- Credit — Once the IRS files a Notice of Federal Tax Lien, it may limit your ability to get credit.
How to Get Rid of a Lien
Paying your tax debt – in full – is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after you have paid your tax debt.
When conditions are in the best interest of both the government and the taxpayer, other options for reducing the impact of a lien exist. There are other options for removal of a federal tax lien, but there are many hoops and rules surrounding those options.
Call 800-NO LIENS or fill out the form today for a complimentary consultation to see how we can help you with your tax matter and getting your lien released.