A federal tax lien applies to all of your real and personal property when you have delinquent IRS tax debt. This lien is automatic and covers everything you own.
However, other creditors won’t know about the lien until a Notice of Federal Tax Lien is filed by the IRS. This is an official public notice to other creditors that the IRS has an interest in your property.
A tax lien can hurt your credit score and make it harder to get loans or sell your assets, so you should avoid it or get it removed from your credit report as soon as possible.
Avoiding the Notice of Tax Lien
You can avoid the lien by paying your taxes on time and in full. If you’re a little late making a tax payment, you may still be able to avoid the Notice of Federal Tax Lien filing if you pay your balance back quickly.
If you can’t pay right away, a Notice of Federal Tax Lien may be filed and impact your credit report. The IRS does offer streamlined installment agreements for certain taxpayers that don’t require the IRS to determine whether a Notice of Federal Tax Lien should be filed.
To be eligible, you must owe under $25,000 in tax debt or owe under $50,000 and set up a direct debit installment agreement. Other conditions apply, so talk to your tax attorney if you’re interested in setting up a streamlined installment agreement.
Removing the Tax Lien
The unpaid tax lien can stay on your credit report for ten years or more, and even a paid tax lien can stay on your credit report for seven years. You can request that the IRS withdraw the lien from your credit report once you meet the following criteria:
- You’ve paid your tax debt in full.
- You’ve filed all required returns for the past three years.
- You are current with all tax payment obligations, including estimated taxes.
You can also request a lien withdrawal if you have set up a direct debit installment agreement and meet certain other requirements. You’ll need to submit Form 12277 to request the lien withdrawal.
Get help with tax lien withdrawals and releases by calling The Gartzman Law Firm at (770) 939-7710. We can help stop bank account levies and wage garnishments before they happen and find a creative solution to your tax problems.