Important Questions About IRS Tax Liens

Here are some handy answers to some frequently asked questions regarding IRS tax liens.

What is an IRS tax lien?

An IRS tax lien is when the federal government, through the Internal Revenue Service, places a claim against your property to secure a tax debt. Before the IRS can file it against you, you must receive a notice of payment due. If you fail to pay the debt after ten days, the IRS will continue a lien against your property for the amount owed. It is applied to all of your property like your home, car, and business accounts receivable. The lien will, no doubt, also affect your credit score.

How do I know if the IRS has placed a lien on my property?

Before the IRS can place a lien on your property for unpaid taxes, you will receive a Notice and Demand for Payment. If you take no action thereafter, the IRS will send you a Notice of Federal Tax Lien.

Is there a difference between a tax lien and a levy?

A levy is when the IRS actually takes possession of your assets against tax debt. This can take the form of a bank levy, a wage garnishment or property seizure. It is a sort of mortgage against your property, in that if you sell it you must settle the taxes owed before the buyer can assume true ownership. The tax lien is a guarantee. The levy is the action of taking your assets.

Why would the IRS file a tax lien against me?

The Internal Revenue Service files it for the purpose of securing payment of unpaid taxes. If you have been served with a tax lien, it is almost always because you owe some or all of your taxes. It can also be filed against a corporation, an estate, company, trust, partnership, or association, as well as an individual.

How do I get a tax lien dropped?

The only way to get it dropped is by full and immediate payment of the money owed. This can be accomplished by paying your debt or an Offer in Compromise in full. If you agree to the terms of a payment plan to the Internal Revenue Service, the lien will not be dropped until you have reached payment in full. If the statute of limitations expires on your debt, the lien should be immediately revoked.

How can I prevent getting a tax lien on my property?

To avoid being served a tax lien against your property, you need only to pay your taxes in full and on time.

Can I appeal a tax lien against my property?

You can appeal it by contacting the managing agent of the unit filing the lien against you and ask him or her to review your case. You can also request a Collection Due hearing. This hearing will take place in the Office of Appeals jurisdiction. You will need to present a well-documented case as to why a lien against your property should not be imposed.

When you owe taxes to IRS, it has several tools to use against you. The tax lien is one of them. IRS can use this tool against your property. You cannot do anything with that property thereafter. It is advisable to take some advance precautions to avoid it. Chintamani Abhyankar discusses some of them providing valuable tips to avoid this unpleasant action from IRS.

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.