What Is an IRS Tax Lien?

Last updated on June 26, 2021

A tax lien is one of the most aggressive collection actions of the IRS. It allows the IRS to have a legal claim against a taxpayer’s property when they ignore or fail to pay their tax debt. The government can seize and sell property, including real estate, personal property, and financial assets, under a lien to satisfy the tax debt. Therefore, ConsumerTaxReviews.org urges taxpayers to resolve their back taxes and avoid a tax lien.

When Is a Tax Lien Placed?

A tax lien can only be placed after the IRS has assessed the taxpayer’s liability. In cases where aggressive collection action by the IRS will result in a financial crisis for taxpayers, other options are explored. ConsumerTaxReviews.org mentions that it is only in cases of extreme financial insufficiency, where taxpayers are not able to meet basic expenses, that the IRS does not place a tax lien. For others, there are IRS payment programs to satisfy the tax debt.

The IRS sends out the notice ‘Notice and Demand for Payment’ to taxpayers explaining how much they owe in taxes. It is only after sending this notice to taxpayers that the IRS places a tax lien.

ConsumerTaxReviews.org encourages taxpayers to respond to this IRS notice even if they have ignored the previous ones. A tax lien can be effectively stopped and a resolution can be reached if a taxpayer opens a clear line of communication with the IRS.

The Effects of a Tax Lien

Having a tax lien placed on your property can be painful for the present and troublesome for the future. A tax lien can be attached to all property(s) of a taxpayer, and to all rights to property, such as accounts receivables, in cases of business owners.

If immediate efforts are not made to satisfy the tax debt, the IRS may sell the property and/or assets to fulfill the debt. ConsumerTaxReviews.org informs taxpayers that after they pay their tax debt in full, the IRS will release the tax lien within 30 days from the date of full payment.

A tax lien is not a private matter. After placing a lien, the IRS will file a public document, the ‘Notice of Federal Tax Lien’, to alert creditors that the government now has a legal right over the taxpayer’s property.

ConsumerTaxReviews.org informs taxpayers that their ability to get credit in the future is hurt by this public notice. Taxpayers may also find it difficult to qualify for a loan, sign a lease, buy a home, or apply for a new credit card, as long as a tax lien is in their name.

ConsumerTaxReviews.org understands that resolving a tax lien may require outside help. Taxpayers can hire the services of tax resolution companies or tax professionals to pay the tax debt and remove a lien. The companies featured on ConsumerTaxReviews.org have been thoroughly researched and verified to give taxpayers a starting point when looking for professional tax debt help. Taxpayers needing to resolve their tax debt and lift a tax lien are advised to begin at ConsumerTaxReviews.org in order to find reputable tax debt relief.