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5 Ways to handle tax liens

On Behalf of | Jul 8, 2022 | Uncategorized

A tax lien is a legal claim that the government makes against the property of an individual or a business when they neglect to pay their owed property taxes. When a tax lien is issued on a property, it is impossible to sell or refinance it until the lien is removed and all the taxes cleared.

Here are five ways to handle tax liens:

1. Installment agreement to have the lien withdrawn

You can negotiate to have the issued tax lien withdrawn by entering into an installment agreement with the IRS. You do this by agreeing to make small payment deposits directly from your bank account until you fully pay the owed property taxes. The government withdraws the tax lien if you reach a certain level after the IRS computes the master tax file.

2. Lien subordination

Withdrawing the lien is usually in the best interest of both the taxpayer and the government. Without a tax lien, it will be easy to collect taxes; therefore, the IRS permits a new lender to take your place to facilitate the payment of the owed taxes to the government. You can get a loan or a mortgage or pay the internal revenue service equal to the interest being given up.

3. Challenge the lien

Sometimes, a tax lien may be wrongly imposed by the IRS or they may file the lien before sending the required notices to the taxpayer. In this case, you may request the lien be withdrawn because of the internal revenue service’s error and violation of collection procedures. It would help if you asked for a certificate of release from the IRS to clearly show that there was an error.

4. File bankruptcy

Filing for bankruptcy may eliminate the tax debt, but the tax lien remains. You can try to negotiate with the IRS by pleading with them to have the tax lien withdrawn by stating that it was discharged in bankruptcy. You may also attempt to enter into a deal with the IRS by paying some amount to settle the tax liability and have the tax lien lifted.

5. Wait for the tax lien to expire

Tax liens do not last forever. A tax lien has an expiry date when it becomes unenforceable. Usually, a tax lien lasts for a minimum of 10 years. If the federal tax lien is allowed to lapse by itself, It will be released; however, it will not get withdrawn.


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