Do Not Allow Federal Tax Lien to Destroy Your Financial Life

Do you have any unpaid tax bill? Then check out if you have received any notice of Federal Tax Lien. This is a tool used by IRS to declare to the world that you are the defaulter and have not paid the taxes.

This tiny little notification has a power to destroy your credit history to a large extent. This notice will stay attached to all your assets and thus you will not be able to sell or apply for a loan against any of your assets. You will find yourself ineligible to purchase even a small asset because of this lien. It will have worst consequences on your entire financial life as it has such a smashing impact on your credit.

After receiving the Federal Tax lien notice you are supposed to pay the tax bill within the given time limit. If you fail to do so, then the IRS is free to file the notice of your debt in all the public records offices. This notice will also be sent in any other country wherever you live if you are not living in US. If you have real estates in other countries, IRS will reach there also.

IRS of course gives you a notice before this happens to give you a final chance to clear up your tax debt. You also get a chance of a hearing from the IRS, wherein you can challenge the validity of the lien. If you fail to convince IRS, then you have further option to appeal to the U.S. Tax Court or a federal district court.

But it is always a good policy to get the Lien released by negotiating with IRS. For this you will have to pay the tax debt in full. You can also think of filing bankruptcy if the conditions are not manageable. The IRS also accepts compromise offers in such cases. After a period of 10 years the statute of limitation can also eliminate this lien.

Once the lien is released, the same is confirmed from IRS by sending you a Certificate of Release of lien within 30 days time. You have to maintain such certificates for each and every lien filed against you. If it is not received by you, you can request for it to the Chief of Special Procedures in the same IRS office from where the lien was filed.

After this work you need to clean your credit report. You should contact the credit reporting agencies and acquire a copy of your credit report. Check these reports properly to confirm if your credit history is properly updated or not. In case it is not, you have to request these agencies to check the public records or contact the IRS. You can also furnish them a copy of the certificate for a quick correction.
Remember, the issuance of a tax lien can remain on your credit records for 10 long years!

A tax lien can prove fatal to your financial life. IRS has wide powers to reach to your assets wherever they are and to report the lien to the credit bureaus. Your options are limited in such a situation and you have to take quick action to prevent further damage. What to do all when you receive a notice of tax lien? Chintamani Abhyankar explains.

Chintamani Abhyankar, is a well known expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of personal finance. His famous eBook Stop donating your money to IRS which is now running in its second edition, provides intricate knowledge and valuable tips on personal finance and income tax.