What is an IRS Federal Tax Lien?

A tax lien is a lien placed by the government upon real estate property in order to get back owed income tax payments. The United States tax enforcement agency the IRS imposes upon its citizen’s tax liens for delinquent taxes owed on personal or real property due to inability to pay income taxes or other taxes.

Federal Tax Lien

A federal tax lien gives a legal claim to property as a way to repay your IRS tax debt. The IRS files a Notice of Federal Tax Lien after:

• appraising liability

• Notice and Demand for Payment is mailed to you - contains information on the amount owed in taxes

• refusal to pay the tax debt in full within 10 days after receiving the IRS notification

Once the above conditions are met, a tax lien is commenced for the tax debt amount. The notice of a lien filing is a public notification to your creditors of the IRS claim against all your property, including any property you attain after the lien is filed. The federal notice has an important role when courts establish priority of debt in certain circumstances, like bankruptcy court procedures or real estate sales.

The federal tax lien appends your total property (i.e. home or car) and your complete rights to property (i.e. accounts receivable), if you are a business.

Consequences of Tax Liens

The main consequence of a delinquent taxes lien filing is injury to your credit rating. Basically, it will be impossible to get a home loan mortgage, automobile loan, other credit, or a lease. Herein, it becomes important that you resolve your tax liability promptly, prior to the lien filing.

Releasing the Tax Lien

A Release of the Notice of tax lien is issued:

• Within 30 days after meeting federal tax obligations, paying the debt or having it adjusted

• Within 30 days after receiving a bond you submit, this guarantees debt repayment

Additionally, all fees a state or jurisdiction charges to file and release the federal tax lien are added to the debt you owe.

Tax Debt Public Record

The lien amount is a matter of public record until the debt owed is paid in full, inclusive of additions and accruals.

Appealing the Lien Filing

There is an opportunity for you to appeal your filing. You can request an IRS manager to review your tax case, and ask a Collection Due Process hearing with the Office of Appeals by filing it with the office listed on your lien notice to request for a hearing. The appeal request must be filed by the date reflected on your notice.

At the end of your hearing, the IRS Office of Appeals will issue a final determination. That determination could support the continuation of the federal tax lien or a release withdrawal. If the ruling is not to your liking, you have a 30-day period starting from the date of determination, to request a judicial review in a jurisdictional court. You can avoid challenging dealings with the IRS by seeking tax help from a tax advisor who has expert experience in getting tax resolution with the IRS on behalf of his clients.