Where to Turn for Federal Tax Lien Help

Allison Blackham
Expert Contributor
Last Updated:
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  • A federal tax lien is a document filed with the local government in the county where a taxpayer’s property is located.
  • When a taxpayer owes taxes, the IRS can file a federal tax lien, giving it legal rights to the property on which the lien exists.
  • Help is available to those who are facing federal tax liens and don’t know where to turn for assistance.

A federal tax lien can drastically impact your credit score and your overall financial well-being. The Internal Revenue Service (IRS) has the legal right to file a lien on your property when you have an unpaid federal tax debt.

A lien is a document the IRS files with the local government in the county where your property is located. The agency can file a lien on either a business or a personal property. When you need help removing or appealing a federal tax lien, we have the tools you need to overcome this difficult financial situation.

What Is the Difference Between a Lien and a Levy?

The IRS can place a lien on a property or levy a property if you owe outstanding tax debt. A lien gives the IRS legal rights to your property, whereas a tax levy allows the IRS to physically seize your property to pay off your tax debt. Other types of tax levies include garnishing your wages or taking funds from your bank account.

Image via Flickr by 401(K) 2013

If you own a property and sell it while a lien is in place, the lienholder has the legal right to the proceeds of the sale. In this case, the lienholder is the IRS. Additionally, a federal tax lien will show up on your credit report because it’s public record.

Where to Turn for Federal Tax Lien Help

How Do I Know if a Lien Has Been Filed on My Property?

After the IRS has filed a lien with the county in which your property is located, you will receive a Notice of Federal Tax Lien. This lien will go into effect starting 10 days after the IRS sent a written notice demanding payment on the outstanding tax debt. If you do not receive a notice regarding the lien, the IRS might be sending it to an outdated address.

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The IRS can file a lien on your home, vehicle(s), securities, and other assets, as well as your business property. Filing for bankruptcy will not eliminate tax debt, nor will it result in the removal of a lien.

How Can I Remove a Federal Tax Lien?

The IRS will only remove a federal tax lien under certain circumstances.

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  • If the lien was filed in error. If you receive a notice but believe the amount of tax debt listed is incorrect, you have the right to appeal. In some cases, a taxpayer can submit tax returns and documents to show the error. You might need to work with a tax attorney in this scenario, as the IRS will assess fines and interest to the amount owed, and it can be difficult to get the entire amount written off due to an error.
  • When the outstanding amount of tax debt is paid in full. If you are unable to pay the full amount owed but the total is correct, you might qualify for a tax debt relief program called an offer in compromise. When you submit an offer in compromise to the IRS, you are making a lower offer that the IRS can choose to accept as payment in full for the debt. This type of offer must be in the best interest of the IRS or the amount the IRS expects to collect from you in a reasonable amount of time.

Not all taxpayers qualify for the offer in compromise program, as certain restrictions do apply. If you’re not a candidate for this option, you can set up an installment plan to repay your tax debt. After you set up a streamlined or guaranteed installment agreement, the IRS will remove the lien within 30 days.

Withdrawing Versus Releasing a Federal Tax Lien

The IRS can either withdraw or release a federal tax lien. These two actions represent different outcomes for you. Withdrawing a federal tax lien is the same as rescinding it, which means it will not show up on your credit report and it will be as if the lien was never filed. Withdrawals often happen when liens are made in error, although the IRS does have a Fresh Start program that allows qualified taxpayers to have their liens withdrawn. To qualify for the program, you must have less than $25,000 in outstanding tax debt.

A federal tax lien release means the property is no longer restricted under the lien. The county will update its records to show that the lien has been released. However, even when a release occurs, the lien will show up on your credit report for up to 10 years. The IRS releases a lien when you set up a payment plan or pay the outstanding debt in full. In some cases, the IRS might release a lien if doing so is in the best interests of both the taxpayer and the federal agency.

Federal Tax Lien Help

When you’re facing a lien on your property due to outstanding tax debt, you might feel overwhelmed, fearful, and even unsure of what your financial future will hold. However, you don’t have to face this situation alone. Help is available to you through the IRS and its tax debt relief and Fresh Start programs, as well as through third-party tax relief solution agencies, such as Solvable. Through our site, you can review articles, connect with tax relief experts, and even find out how to submit an offer in compromise or set up an installment plan.

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Visit Solvable to find out how we can help you remove a federal tax lien from your property and overcome your outstanding tax debt. We can assist with solutions and resources that will help you move toward financial freedom.

 

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Allison Blackham
Expert Contributor
Last Updated:

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