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The tax lien is one of the Internal Revenue Service’s most effective collection methods. When the government places a legal claim on your property to secure payment for a tax debt, it can significantly impact your finances, assets, and even your credit. While the routine way to remove an IRS tax debt is to pay the amount owed, there are other options if you can’t afford to do so or don’t believe the lien is valid.
What Is an IRS Tax Lien?
If you neglect or fail to pay your tax debts, the IRS can place a tax lien on all of your property, including real estate, personal and business property, and financial accounts. It is important to note that the IRS doesn’t have to formally file a lien- it automatically attaches to all of your property and property rights if you don’t pay a tax balance after a formal demand. The government will, however, file a notice of Federal Tax Lien to ensure that it gets paid before any of your other creditors.
How Can You Remove an IRS Tax Lien?
Several options are available to you if your property is encumbered by a federal lien:
Lien Release
Obtaining a lien release requires that you pay the full amount due, including penalties and interest, or the amount that you negotiate with the IRS as an Offer in Compromise. The lien can also be released if it is no longer recoverable by statute. Bear in mind that even after your lien has been released, it will continue to appear on your credit report for several years.
Lien Withdrawal
In certain circumstances, you can remove an IRS tax lien through a lien withdrawal. These situations include:
- An erroneous lien filing on the IRS’ part
- You have a personal tax debt of $25,000 or less and qualify for the Fresh Start Program
- You make a lien withdrawal request for liabilities paid in full
In contrast to a lien release, a lien withdrawal will not appear on your credit report.
Lien Discharge
In a “discharge,” the lien is removed from a specific property. Lien discharges are typically requested when you are trying to sell a piece of property, but the lien prevents you from finding a buyer. Tax authorities will only grant a discharge if it is in their best interest. As a general rule, this will apply only if the IRS receives the net equity from the transaction or if you still have assets subject to the lien.
Lien Subordination
Instead of removing a federal tax lien, this relief option allows other creditors to move ahead of the IRS, making it simpler to get a mortgage or loan. For example, you may wish to refinance your mortgage to reduce your payments, but the issuer won’t let you do so if the IRS is a priority creditor. You would have to convince the government that lien subordination would allow you to apply more money to your tax debt.
Conclusion
Having an IRS tax lien on your property is a serious matter that can interfere with your personal and professional life. A qualified Miami tax attorney can provide the legal advice and representation needed to resolve it in the most expedient way for your circumstances. If you’re facing a tax lien and wish to review your options with a lawyer, call Weisberg Kainen Mark, P.L. at (305) 374-5544 today.
Weisberg Kainen Mark, PL
