Levins Tax Law
Schedule your initial consultation:

Experienced and Trusted
Representation From A Tax
Attorney And Former IRS Agent
And "BIG 4" Tax Partner

Photo of Attorney Gerard J. Levins

What happens when the IRS puts a lien on your property

On Behalf of | Oct 23, 2022 | Uncategorized

If the IRS places a lien against your home or other assets, the only way to reverse this action is to pay off your tax debt in full or negotiate with the IRS for a withdrawal or subordination. But what does an IRS lien actually mean, and what are your options? In this article, we’ll give you an overview of IRS liens and possible options to pursue you have if you have one placed against you.

What is a lien?

When you ignore or delay the payment of tax debt, the United States federal government places a claim on your property in order to secure its collection. The IRS issues you a bill that says how much you owe, called a Notice and Demand for Payment. If you refuse or neglect to pay the amount due, then the IRS files a public document, the Notice of Federal Tax Lien, which alerts creditors that the government has a legal right to your property. 

Lien vs. Levy

Both a levy and a lien are used by the IRS when someone owes a significant amount of money, but there is a difference between the two actions. A lien is a legal claim against your property for payment of your tax debt, whereas a levy is the actual legal seizure of your property to satisfy a tax debt. If you have a lien and do not pay your tax debt or arrange to settle it, the IRS can levy and sell any personal property or real estate that you own.

How do I remove a lien?

The most straightforward method to remove a lien is to pay your tax debt in full. Once paid, your tax lien will be released by the IRS within 30 days.

Subordination or withdrawal are two alternative routes to explore, although they do not relieve you of your debt. Subordination doesn’t necessarily remove the lien but allows other creditors to move ahead of the IRS, making it easier to get a mortgage or a loan. Withdrawal removes the Notice of Federal Tax Lien and ensures that the IRS will not compete with other creditors for your property. However, the amount owed still remains your responsibility.

How else does a lien affect me financially?

The IRS will always ensure that they are paid any debts they are owed. If you have a lien for failing to pay taxes due, your finances can be negatively impacted for the duration of the lien.

Assets

Your lien applies to all of your assets, including property, securities, and vehicles, as well as any new assets that you acquire during the duration of the lien.

Credit

You may be unable to qualify for a line of credit or find it very difficult to do so once you receive a Notice of Federal Tax Lien from the IRS.

Bankruptcy

Filing for bankruptcy does not eliminate liens. You may still have tax debt, liens, and Notice of Federal Tax Liens even after filing. 

 

 

Archives

FindLaw Network