July 07, 2010 - William L. Henry IV
The IRS filed 965,618 tax liens in its 2009 fiscal year, according to the Internal Revenue Service data book. If you are facing an IRS tax lien, here is why liens are filed and what to do about it.
Why does the IRS files a notice of federal tax lien in Colorado?
The IRS files a notice of federal tax lien to secure payment of your tax debt. The tax lien gives the IRS legal claim to your property.
The tax lien can only be filed after (1) the IRS assesses the liability; (2) the IRS sends you a Notice and Demand for payment; and (3) you do not pay the tax debt assessed after 10 days.
What does a federal tax lien do?
A federal tax lien harms your credit. It also puts your creditors on notice that the IRS has a claim against your property-your home, for example. When you sell your home, you will have to pay the IRS the amount of the lien.
What can you do about a federal tax lien?
- You can pay off a federal tax lien. If you fully pay the lien, including costs, interest and additions, the IRS must release the lien within 30 days. If the IRS knowingly or negligently fails to release the lien, you can sue the federal government.
- After 10 years the lien is automatically released. The IRS can refile the lien in many circumstances, however.
- If you negotiate with the IRS to satisfy the federal tax debt and the IRS accepts your offer, the tax lien will be released once the payment is made.
- You can request a certificate of discharge if for a release on a specific piece of property. If the property is your primary residence, you may be able to apply for a taxpayer relocation adjustment on the amount of the lien.
- You can request that the IRS lien is withdrawn. The IRS will withdraw the lien if (1) The notice was filed too soon or not according to IRS procedures; (2) You entered into an installment agreement to pay the debt on the notice of lien (unless the agreement provides otherwise); (3) Withdrawal will speed collecting the tax, or (4) Withdrawal would be in your best interest (as determined by the Taxpayer Advocate), and in the best interest of the government.
- Finally, you can appeal the IRS lien. Appeals are typically based on collection alternatives, the running of the statute of limitations, and failure of the IRS to follow the law.
If you have any question concerning IRS liens and how our tax lien attorneys can help, please contact our office at (303) 688-0944 to schedule a free consultation. You can also schedule online.
Updated: The IRS has a new program for taxpayers attempting to modify a home loan or refinance. The process allows the homeowners to subordinate the lien so the modification or refinancing can occur.