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Tax Liens

How to Release IRS Tax Liens?

What is A Tax Lien?

IRS Collectors have a powerful arsenal of collection methods. Although it seems like a routine administrative exercise, a tax lien is actually one of the most powerful collections weapons, especially when the taxpayer owns real estate or other major assets.  Unlike a levy or a wage garnishment, a tax lien does not immediately seize any assets, but its consequences may be more harmful, and last for many years. A Lien grants the tax agency a legal claim to the debtor’s assets as security for a tax debt.

How Does IRS File A Tax Lien?

A federal tax lien automatically arises once the tax debt is assessed, and the IRS makes a demand for the payment.  Although a “secret lien” will automatically arise, the IRS must file a Notice of Federal Tax Lien to let the world know about the tax debt, and establish its place among other creditors. After a few simple procedural hoops, a tax lien is filed by the government to protect its interests. Recorded with one or several county recorders, a lien publicly discloses that you owe back taxes.

Why Do Tax Liens Matter?

Recording of the lien will negatively affect the taxpayer’s credit and even employment opportunities or business ventures.  Lien makes it very difficult to obtain credit or to sell real estate.  Liens may also jeopardize current of future employment, especially with certain government clearances, licenses, or jobs in the financial industry or public sector.

How To Resolve A Tax Lien

Although the taxing agencies are extremely reluctant to release or modify IRS liens, TaxHelpers may be able to get the government to subordinate its lien to a lender, thus allowing the client to borrow money against his assets to satisfy all or part of the tax debt. Furthermore, if an asset has not equity, a lien may be removed or lowered (as in cases of short sales and family transfers). Our tax lawyers also make sure that the tax agencies have met all legal requirements for a valid tax lien filing. If any procedural defects or numerical errors are discovered, our tax attorneys immediately appeal the filing of the tax lien.

The taxpayer may also get tax lien relief through a tax settlement, audit reconsideration or tax motivated bankruptcy.

Releasing a Lien generally requires coming to some kind of repayment agreement with the IRS. However, the IRS won’t release a Tax Lien simply because you ask them to, and most of the time professional assistance is required to argue on the taxpayer’s behalf and prove that he or she is serious about settling the debt.

If you have received a Notice of Federal Tax Lien, then it means the IRS is seriously pursuing enforcement of your debt, and you cannot afford to put it off any longer. If you’ve made it to this point, we highly recommend consulting with a tax attorney to see what your options are.

What Is Lien Subordination?

Lien Subordination allows the debtor to borrow funds against an asset and pay off part or all of the tax debt. In the event that taxes are not paid in full, a lien in favor of the United States arises upon all property and rights to property, whether real or personal, tangible or intangible, belonging to the taxpayer. Even if the taxpayer makes partial payment, a tax lien will arise for the balance of the tax.  As you can see, after the lien is filed, the lenders will be very reluctant to lend money against an asset, because the IRS would have superior position. The IRS may subordinate its interest if the taxpayer wants to borrow and pay off part or all of the tax debt.  The IRS is essentially taking a back seat, and allowing other lenders priority against the assets. The IRS may agree to the subordination if the tax debt is partially or fully satisfied and/or in the best interest of the government.

Subordination is generally a tedious and time-consuming project, requiring extensive details of the loan and other documentation.

Related Topic: Resolve IRS Tax Liens