The tax lien notice is a sign that IRS has started harsh measures to correct the tax debt that is outstanding. This is one of the six harsh actions by the IRS when they conclude that you are in no mood to pay the tax debt.
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What is a tax lien?
A federal tax lien is a claim by the IRS legally placed on a taxpayer’s property as security for unpaid tax debt. The lien applies to all a taxpayer’s assets, like real estate, personal property, and financial assets. The lien notice alerts creditors and potential buyers that the IRS has a legal claim to the taxpayer’s property. This post will answer your often-asked question, ” what to do when you get a tax lien?”.
Meaning of lien
The dictionary meaning of the word “lien” is “any official claim or charge against property or funds for payment of a debt or an amount owed for services rendered.” A lien is usually a formal document signed by the party to whom money is owed and sometimes by the debtor who agrees to the amount due. A lien carries with it the right to sell property, if necessary, to obtain the money. A mortgage or a deed of trust is a form of lien, and any lien against real property must be recorded with the County Recorder to be enforceable, including an abstract of judgment which turns a judgment into a lien against the judgment debtor’s property.
Legal Dictionary
Tax lien arises automatically!
IRC section 6321 provides that if a taxpayer neglects or refuses to pay any tax after demand, the amount, including interest and penalties, shall be a lien in favor of the United States upon all property and rights to property belonging to the taxpayer. The lien arises automatically by operation of law when the tax assessment is made, and no notice of the lien is required to be filed for it to be valid against the taxpayer. However, the IRS must notify to state or local authorities where the asset is situated so that other creditors and potential buyers of the taxpayer’s property know that the IRS has a legal claim.
When does IRS file a tax lien?
The process of issuing a notice of lien by the IRS involves several steps. First, the IRS assesses taxpayers’ tax liability and sends them a Notice and Demand for Payment. Suppose the taxpayer does not pay the tax debt or make arrangements to pay it. In that case, IRS may issue a Form 668(Y) Federal Tax Lien notice to state or local government office authorities alerting creditors and the public that the government is interested in your current and future property and assets. A copy of this Form 668 is sent to the taxpayer as well.
How does a tax lien lawyer help?
Tax lien lawyer can help taxpayers in several ways and help resolve issues related to tax debt. They are specialized tax debt lawyers and can negotiate with the IRS to reduce the tax debt or set up a manageable payment plan for the taxpayer. A tax lien attorney can also help the taxpayer apply for a lien discharge, subordination, or withdrawal. A lien discharge removes the lien from a specific property, while a lien subordination places the IRS’s lien in a secondary position behind another creditor’s lien. A lien withdrawal removes the lien from the taxpayer’s record altogether.
Can IRS withdraw the lien?
The IRS also offers a program called the Fresh Start Initiative, which allows taxpayers to request the withdrawal of a tax lien if they have paid their tax debt in full or if they have entered into a payment plan with the IRS. Taxpayers who meet the program’s criteria can request the tax lien withdrawal by submitting Form 12277, Application for Withdrawal Federal Tax Lien.
Are IRS liens public records?
Tax lien notices filed by the IRS are public records. This means that the information in a tax lien notice is available to the public and can be accessed through various sources, such as public records databases and credit reporting agencies.
Tax lien notices are typically filed with the county or state where the taxpayer resides or owns the property, and the local government usually maintains these records. In addition, the IRS also maintains a public database of federal tax liens that have been filed against individuals or businesses.
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While the information on this site - Internal Revenue Code Simplified-is about legal issues, it is not legal advice or legal representation. Because of the rapidly changing nature of the law and our reliance upon outside sources, we make no warranty or guarantee of the accuracy or reliability of information contained herein.
