What Is An Federal Tax Lien?
A tax lien can be one of the worst negative items to appear on your credit report. An federal tax lien is a legal claim against your property when you neglect or fail to pay federal tax debt. It’s considered very negative, as it will cause your credit scores to drop significantly. The federal tax lien protects the government’s interest in all your property, including real estate, personal property and financial assets. It is recorded with your county and will prevent a sale of real estate, refinancing a mortgage loan and more. A federal tax lien exists after the IRS:
- Puts your balance due on the government books (assesses your tax liability);
- Sends you a bill that explains how much you owe (Notice and Demand for Payment); and
- Neglect or refuse to fully pay the debt in time.
The IRS files a public document, known as the Notice of Federal Tax Lien, to alert creditors that it has a legal right to your property.
Generally, the IRS will file a tax lien when the tax due is $10,000 or more.
How to Get Rid Of An Federal Tax Lien
Here are a few ways to get rid of an federal tax lien:
- Paying your tax debit in full is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after you have paid your tax debt.
- The other option may allow withdrawal of your Notice of Federal Tax Lien if you have entered in or converted your regular installment agreement to a Direct Debit installment agreement.
General eligibility includes:
- You are a qualifying taxpayer (i.e. individuals, businesses with income tax liability only, and out of business entities with any type of tax debt)
- You owe $25,000 or less (If you owe more than $25,000, you may pay down the balance to $25,000 prior to requesting withdrawal of the Notice of Federal Tax Lien)
- Your Direct Debit Installment Agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is earlier
- You are in full compliance with other filing and payment requirements
- You have made three consecutive direct debit payments
- You can’t have defaulted on your current, or any previous, Direct Debit Installment agreement.
- The IRS tax lien expires – generally the lien will expire 10 years after they are assessed unless the deadline has been extended beyond 10 years, such as by filing an Offer in Compromise, residing overseas, etc.
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Our goal at Tax Samaritan is to provide the best counsel, advocacy and personal service for our clients. We are not only tax preparation and representation experts, but strive to become valued business partners. Tax Samaritan is committed to understanding our client’s unique needs; every tax situation is different and requires a personal approach in providing realistic and effective solutions. Anything of value can be taken to satisfy the tax liability. We also understand the potentially devastating effects of a federal tax lien. It will damage your credit and make it almost impossible to obtain a loan or receive any other form of credit.
We understand how hard you have worked to acquire your property and assets. If you’re struggling with an federal tax lien and need help with getting back into compliance and exploring your options to remove the tax lien, please click the button below to request a Tax Resolution Quote today to get started with the resolution of your Federal Tax Lien and/or a free 30-minute consultation to discuss your situation further.
The IRS is represented by a team of revenue and collection agents that are focused on making sure that your tax debt is collected. When facing a federal tax lien, you should be represented by a qualified Enrolled Agent to protect your interests. Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US tax preparation and representation. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.
When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts). If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).
Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.