If the IRS has placed a lien on any of your assets because you have unpaid taxes, trust that you are not alone. This isn’t at all uncommon; however, it does need to be addressed in a timely manner.
What is a Federal Tax Lien?
According to the IRS website. “A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property, and financial assets. A federal tax lien exists after:
The IRS:
- Puts your balance due on the books (assesses your liability);
- Sends you a bill that explains how much you owe (Notice and Demand for Payment); and
You:
- Neglect or refuse to fully pay the debt in time.
The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.
The best and probably most obvious way to settle this issue is to simply pay the debt you owe to the IRS. The books will be wiped clean, and over time, the lien or liens will be released. However, this is not always possible for many people – after all, not having enough money to pay the tax debt is likely why the lien was filed in the first place.
So, what are your options? Other than paying your tax debt, the other options, as listed below, are each subject to eligibility requirements as outlined in the Internal Revenue Code that we will need to analyze to determine if you meet all of the requirements.
Discharge of property
A “discharge” removes the lien from specific property.
Subordination
“Subordination” does not remove the lien but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage.
Withdrawal
A “withdrawal” removes the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property; however, you are still liable for the amount due.
What Happens if I Ignore A Tax Lien?
It’s crucial to take the next steps in your lien resolution efforts. If you do not, the adverse effects can include the below:
- Personal Assets: A lien gives the IRS a legal claim to your current property, such as real estate, vehicles, or investments, as well as anything you acquire while the lien is in place.
- Credit Access: When the IRS records a Notice of Federal Tax Lien, it can damage your credit profile and make it difficult to secure loans or new lines of credit.
- Business Assets: If you own a business, the lien also applies to business property and rights to property, including accounts receivable.
- Bankruptcy: Filing for bankruptcy does not automatically remove a federal tax lien, and your tax liability may survive even after other debts are discharged.
Lien Resolution Lawyer in Washington, DC & Maryland
Dealing with the IRS can feel overwhelming, especially when a lien is involved. Having an experienced tax attorney by your side is critical. Michael Lapidus has years of experience with his LL.M. in Taxation from Georgetown University Law Center, and he is licensed in DC, Maryland, and Pennsylvania. He has years of experience representing clients before both the IRS and state tax agencies, and his background in the international tax division of a major accounting firm gives him an edge in handling even the most complex tax situations.
Whether you’re dealing with an audit, unpaid taxes, penalties, or another IRS dispute, Michael is committed to safeguarding your interests and working to reduce the financial strain. Don’t take on the IRS alone. Contact The Lapidus Law Firm at 202-785-5111 for knowledgeable guidance and reliable representation.