Federal Tax Lien - What it is and How to Deal with It

The very first big guns the IRS uses when dealing with uncooperative taxpayers who owe back taxes is the federal tax lien. That’s when the rubber hits the pavement for the IRS and you need to pay attention. People delay handling their tax problems because they fear the IRS and that is certainly an understandable fear. However, the best way to deal with the IRS is to actually deal with them. Even the smallest communication will help your case. When you don’t respond to those letters and phone calls, bad things can happen and the federal tax lien is the shot across the bow.

So what is a federal tax lien exactly? A tax lien is basically when the IRS lays claim to a piece of your property as collateral for what they perceive is owed tax debt. They want to be sure to get their pound of flesh and this is the first step to recovering the money they feel the tax payer owes. If you ignore the federal tax lien things can get even uglier in the form of a tax levy. With a tax levy the government can seize your property and auction it off to pay your tax debt. This is bad stuff. This should be a compelling enough reason to deal with a tax lien as quickly as possible.

Besides the obvious problem of losing your property, a federal tax lien can cause other problems as well. With a lien on your property you will not be allowed to sell the property until the lien is satisfied. You also may not be able to obtain financing for other assets like cars or additional houses. And, of course it will mess up your all important credit rating with the credit bureaus. In a word, tax liens are just bad.

The best ways to get rid of a federal tax lien is to make a deal and pay it off. However, this doesn’t mean you should run with your tail between your legs to the closest IRS office with a check. As a taxpayer, you have rights and you are tasked to hold the IRS accountable for every penny they say you owe. Remember, the IRS makes mistakes too and it has happened where they did not have the right to place liens on property. The best thing you can do is consult a tax professional to help you.

Release Federal Tax Lien
How to release a federal tax lien.