IRS Tax Liens

What are IRS Tax Liens and What Common Problems do they cause?

An IRS tax lien is merely evidence of a debt that is owed to the IRS. An IRS lien exists by operation of law. Therefore, once a tax is due and not paid, an IRS lien exists. The IRS will file a lien at the local county recorder's office to give public notice that a debt is owed to the IRS. Once filed, an IRS lien becomes a security instrument and takes priority over subsequent creditors.

IRS tax liens are problematic for three reasons. First, they adversely affect individuals' credit ratings. This will make loans expensive if not impossible. Second, an IRS tax lien makes it difficult to move assets (business or personal) from one entity to another. Third, an IRS tax lien can affect an individual's ability to gain employment or housing. Often times employers and landlords will not offer positions or housing to individuals with recorded tax liens.

Why Does the IRS File a Tax Lien?

The IRS files a tax lien to secure their right to collect unpaid taxes. In the event that a taxpayer files for bankruptcy, the IRS lien filing would give the IRS priority over the unsecured creditors also listed in the bankruptcy. As such, if any money is distributed through the bankruptcy to unsecured creditors, the IRS will collect first.

The IRS also files a lien so as to avoid having taxpayers dissipate assets. While an IRS lien will not take priority over secured lenders (i.e. home mortgages and car loans), they will protect the IRS from improper transfers of real estate and vehicles in an effort to avoid IRS collections. An IRS lien that attaches to a home or piece of real estate will remain against that real estate until the tax is either paid, subordinated (to allow for refinancing) or expires. Any transfer of real estate after the IRS lien has been filed will not result in release of the IRS tax lien. The IRS tax lien will attach to the property until it is paid, settled (via an Offer in Compromise), subordinated, or expired.

How Long do IRS Tax Liens Last?

If not resolved, the IRS tax lien will generally last 10 years. This gives the IRS plenty of opportunity to collect the past due taxes. The IRS tax lien may be extended beyond the ten year period under a variety of circumstances. Filing a bankruptcy will extend the IRS tax lien. Filing an Offer in Compromise will extend the IRS tax lien. In very rare circumstances, after the ten year statutory time limit has run, the IRS may seek to have the tax lien reduced to a Federal Judgment which would have the effect of extending the life of the IRS tax lien by an additional seven years. Under some circumstances, IRS tax liens can be discharged in a bankruptcy proceeding.

Why are IRS Tax Liens Difficult to Resolve?

IRS tax liens can be difficult to resolve because the rules allowing for a lien release or a negotiated settlement are a bit complex and interplay with various provisions of the Internal Revenue Manual. The Internal Revenue Manual is the IRS rule book. The IRS revenue officers are mandated to follow the provisions of the Internal Revenue Manual.

How the IRS TaxMasters Resolution System can help?

In resolving IRS tax liens, there are a variety of techniques to resolve a variety of issues. First, if the tax lien is expired, we can help you make that determination. Then, we can help guide you in getting the lien removed. Second, if a lien is improperly filed, we can guide you through the Certificate of NonAttachment process and get the IRS tax lien removed. Third, if you want to refinance real estate that is subject to an IRS tax lien, we can guide you through the Lien Subordination process or Certificate of Discharge process. Fourth, if you qualify for an Offer in Compromise, we can guide you through that process and thereby have the IRS tax lien settled for less than the full amount due.

With the IRS TaxMasters Resolution System, you have tax attorney guidance every step of the way. Tax Attorney help is as close as your telephone.