Tax Liens
IRS
Has the IRS filed a lien against you or your business? Are you not even sure what the heck a lien even is? You may not even know you have one, but a lien is always the first step that taxing authorities take to collect a debt. As soon as they know you owe them money, they’re going to file a lien. We can help you respond to a lien filing or determine your eligibility for a withdrawal, subordination, discharge or release.
Questions?
What is a federal tax lien?
A tax lien is one of the most powerful tools in the IRS arsenal to collect tax revenues. It is the basis for the government’s claim against the property of an individual or business. The IRS will file a Notice of Federal Tax Lien (NFTL) to make good on their claim against a taxpayer with a tax-related debt. Most Americans get familiar with liens when they apply for vehicle financing—the company that finances your purchase will put a lien on the vehicle so that you cannot sell it without paying them. A federal tax lien operates similarly, except it applies to all of your property and ensures your current and future rights to that property cannot be sold without the lien holder (in this case, the IRS) being paid their interest through the sale.
How do I get rid of the lien?
Just like a vehicle with a lien, or a house with a mortgage, the simplest way to get rid of the lien is to pay off the balance in full. Liens are immediately in effect once the IRS makes demand for payment and the liability is not paid. The Notice of Federal Tax Lien (NFTL) can be withdrawn, subordinated, discharged, and/or released, but the statutory lien will always be in place as long as there is a past due debt for which the IRS has a claim. If you want to know what your options are, please reach out today and we can discuss what cane be done about your federal tax lien.
What’s the difference between a withdrawal, subordination, discharge and a release?
While you may continue to owe the debt and therefore have a statutory lien in place, the IRS is willing to withdraw their claim to 3rd parties: the Notice of Federal Tax Lien (NFTL). Withdrawing a lien means it won’t show up on your credit report, even though you still owe the past due taxes. Subordinating a lien involves a nuanced application to IRS wherein you ask them to set their claim aside so another creditor can get lien priority. This is a good option for refinancing property. Discharging a lien requires the most detailed application and hoops to jump through, but if accepted the IRS will allow the sale of certain property that would normally be subjected to the lien. This is a good option for our clients that need to sell their homes with a tax lien; if approved, the IRS will discharge the home of the tax lien and allow the sale.