Taxpayers who owe more than $10,000 can avoid federal tax liens.
The most effective way to avoid a tax lien is to enter into a streamlined installment agreement to pay the full balance or to request an extension of time to pay for up to 120 days.
A federal tax lien is the government's legal claim against your property when you neglect to pay your tax debt. It's a lien that protects the government's interest in all of your property, including personal property, real estate and financial assets. A federal tax lien is placed after the IRS sends a taxpayer a Notice and Demand for Payment, and the taxpayer either refuses or neglects to fully pay the debt in time.
IRS liens affect taxpayers in a variety of ways. The lien attaches to all assets, including securities, vehicles, property and to future assets acquired. Once the IRS has filed a Notice of Federal Tax Lien, it may also limit the ability to attain credit. For businesses, the lien attaches to all business property and accounts receivable. Even if a taxpayer files for bankruptcy, the Notice of Federal Tax Lien generally continues.
While paying off tax debt is the best way to get rid of an IRS lien, there are other options for reducing the impact of the lien.
Getting rid of an IRS lien is a complicated process. Seeking the help of an independent tax attorney or experienced tax consultant is a wise move to ensure that it's in your best interests. If you receive a Notice of Federal Tax Lien, don't ignore it. Contact the IRS immediately. A mistake may have been made or there may be mitigating circumstances in order to appeal the tax lien.