Tax liens are an instrument which the Internal Revenue Service and state Departments of Revenue (as well as cities which levy income taxes on the municipal level) use to secure interest the tax liabilities of individual taxpayers and businesses. However, they’re of debatable value, especially when the taxpayer in question doesn’t happen to have any appreciable assets with which to satisfy their tax liability or for that matter, assets which could become involved in an IRS or state tax lien foreclosure.
At the same time, an IRS or state tax lien can result in damage to your credit rating, which in turn can keep you from being able to get a loan to pay your back taxes. However, there are ways to have your tax lien released Your taxes will have to be paid in full though an IRS or state tax lien payoff, the period of collection has to have ended or your back taxes will have to be guaranteed by a bond in order to be released, which means that the notice of tax lien will have to be cancelled (this is done by the tax authority filing a Certificate of Release) and the lien itself will be cleared of record. IRS Publication 594 can be very helpful if you’d like to learn more about the conditions under which the IRS will release a lien.
Actually, there are other ways to have a federal or state tax lien released. One is an installment payment agreement with the IRS or state tax authority; the IRS will release a lien in the interest of helping taxpayers to more quickly pay their back taxes. At least if the lien is for federal taxes, it may also be released by the IRS if it was filed immediately following bankruptcy proceedings (during the stay period) or if the IRS otherwise failed to follow proper procedures in filing the tax lien.
Other Lien Release Options
You may also apply for the partial discharge of a tax lien in order to prevent the lien from being attached to certain real property and other assets. This is most often done when you’re trying to sell the property in question (which allows the buyer to have clear, unencumbered title to the property). It’s also possible to subordinate your tax lien – this allows other creditors to move ahead into first lien position (or at least ahead of the IRS or state tax authority’s lien position). This can allow you to obtain a loan to refinance real property.
What many taxpayers who have a tax lien filed against them are concerned with is the possibility of an IRS or state tax lien foreclosure, as well as stopping the deluge of calls and letters from debt settlement companies offering their assistance (since tax liens are available through searches of the public records). If you’re worried about your back taxes, one thing which may set your mind at ease to a certain extent is the knowledge that the IRS will not file a tax lien for a debt of less than $10,000; it’s also true that if you have a mortgage, this lien will take priority over a tax lien and you may not have to worry about an IRS or state tax lien foreclosure. However, if you’re in doubt, you’ll want to speak with a tax attorney or CPA to discuss your options to satisfy your tax liability and have your tax lien released.
Have more questions? The Your Tax Clinic Team is more than happy to help! Call us now for a FREE Tax Solution Consultation (855)220-0770