What is a Federal Tax Lien?
A Federal Tax Lien is a claim against your property, including property that you acquire after the lien arises. The lien arises automatically when you fail to pay the taxes you owe within ten days after the IRS sends its first notice.
Significance of the Filing of a Notice of Federal Tax Lien:
The government may also file a Notice of Federal Tax Lien, which provides public notice that you owe money to the IRS. This will appear on your credit report and will inform anyone considering doing business with you that you owe back taxes. Most importantly though, upon filing a Notice of Federal Tax Lien, the IRS becomes a secured creditor behind any prior secured interests, but ahead of all unsecured creditors. This means what if you own a home with equity, an IRS tax lien will attach to that equity and when you sell or refinance your home, the IRS is going to either be paid in full or refuse to discharge the tax lien.
How to have a Lien Released?
Once a lien arises, the IRS generally cannot issue a Certificate of Release of Federal Tax Lien until the taxes, penalties, interest, and recording fees are paid in full or until the IRS may no longer legally collect the tax. In general, there are four different ways to deal with Federal Tax Liens, and we would be happy to discuss those options with you today. After understanding your personal situation better, we will be able to provide you a tailored plan to having your Federal Tax Lien removed.