July 12, 2016

Denver Tax Attorney   How to Prevent and Remove a Tax LienLiens are routinely filed by the Internal Revenue Service against taxpayers with unpaid tax obligations. A federal tax lien is a document filed with a county government, typically where you, the taxpayer, either lives or conducts business. A lien notifies the public that you have unpaid federal tax debt.

Tax liens attach to your property. If a property is sold with a lien still in effect, then the IRS will first be paid with the proceeds of the sale before you can be paid.

Preventing a Tax Lien

How can you prevent a tax lien? The most viable option is obvious: By paying your taxes in full and doing so before the IRS files a lien against you.

Another way of preventing a lien is by establishing an installment agreement that meets IRS requirements. A guaranteed installment agreement requires that you have an outstanding balance of $10,000 or less, while the streamlined installment agreement requires an outstanding balance of $25,000 or less. If you owe more than $25,000, then the lien may only be prevented if you pay down the balance until it is $25,00 or less and set up a streamlined installment agreement. If you agree to either of these two types of installment agreements, then the IRS will not file a tax lien against you.

Removing a Tax Lien

 There are several situations that warrant the removal of a tax lien. These include if the tax lien was erroneously filed, if the unsettled balance is fully paid, if your unsettled balance is satisfied—such as through a successful offer in compromise—or if the lien is deemed unenforceable.

The two ways to remove a tax lien are through withdrawal and release.

Withdrawing a tax lien means that it will be rescinded, and it will be as if it was never even filed. Withdrawals typically occur when a lien was filed in error, such as if it was filed against the wrong taxpayer. You may also be qualified for a withdrawal if you meet the criteria of the IRS fresh start program, such as if your outstanding balance is below $25,000.

Releasing a tax lien means the lien will not be attached to your property or assets any longer. County records will be updated to reflect that it has been released. Note, however, that your credit report will show there was once a federal tax lien on your property for up to ten years after the debt has been paid off.

If you’ve set up a guaranteed installment agreement or a streamlined installment agreement, or have fully paid off your unpaid tax obligations, then your tax lien will be released within 30 days. In some instances, the IRS may release a tax lien if doing so will speed up tax collection or if it is in both the taxpayer and government’s best interests.

Once a lien is released, you will be furnished with copy of the lien release so you can update your credit reports with the credit reporting bureaus.

 

 

Categories: Blog, Tax Levies