An IRS Tax Lien is a result of owing money on back taxes. The lien is placed on items you own such as possessions, land, or your home. While leans can be intimidating, they are not a seizure of your possession for monies owed.
However, if left unaddressed, a lien can become a levy which can result in the seizure of assets. Addressing a tax lien is of the utmost importance because doing so can prevent more severe actions from being taken by the government.
How to Remove a Tax Lien
Pay the Balance
While rather obvious, the quickest solution for a tax lien is to pay the balance due. While it is not the only method of dealing with the issue if you have the funds available, simply paying what is owed to the government is a quick and direct solution.
Payment Plans
The IRS does offer payment plans if paying off a balance in a single payment is not possible. Payment plans can vary depending on your unique situation. In many cases, interest and other fees still apply. However, the lien itself can be removed from your public record as long as payments are made as per the agreement.
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Compromise Offers
Another option is to request a compromise. This is an agreed-upon payment to clear your record and remove the lien without paying the full amount due. While this can save you money, there are precise rules and steps to follow.
For example, all your tax returns have to be current and your payments for the current tax year have to be paid. Also, compromises are not easy to get as the IRS has to agree to a compromise offer, and less than half of such requests are approved.
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Requesting an Appeal
In some cases, if you feel a lien is unwarranted or incorrect, you can file an appeal with the IRS. The IRS does have to follow due process and have rules to follow as you do. If you feel that due process was not followed, you can file an appeal.
Another area of appeal is if you disagree with an agent’s assessment of a lien, you can ask for a managerial review. Finally, if needed, the IRS’s Office of Appeals can review your case.
Declaring Bankruptcy
If your debt is insurmountable, bankruptcy is an option. It should be noted that bankruptcy should always be considered your absolute last option when all other courses of action have been exhausted.
Plus, bankruptcy is complex, has several rules, and affects many aspects of your finances. Also, bankruptcy is not a guaranteed solution for removing all taxes owed to the government.
Final Thoughts
If you have an IRS tax lien, the most important thing to do is to not ignore it and take proper action. The IRS can start levying fees and penalties immediately and issuing liens and later levies within a few months.
Ignoring a lien leads to more severe actions such as a loss of property, bank accounts being seized, or your wages being garnished.
If you need assistance with addressing your tax lien or other tax-related issues, professional services do exist to provide you with the advice and guidance you need.