IRS Tax Lien And Its Effects on your Credit Report

Receiving notice of a tax lien on your tax return can be scary. Questions can come up, such as what a tax lien is and how it came to be on your file. Of course, with this, most will also wonder how the lien works, and probably also wonder how to release it from their name. The most important thing to remember is to keep calm during this process because solutions are available.

A tax lien (also known as a tax levy) simply put, it is what happens when you fail to pay your debts to the IRS for a long enough period. As a result, the IRS will attach a lien, or a right to take possession of the property, to your personal and business assets until the debt is paid. This can have several negative effects on your accounts.

While the tax lien is in place, you cannot sell or transfer ownership of your property, which can make it hard to repay your debt. The tax lien may attach itself not only to your personal property, such as houses, vehicles, or other valuables but also to your business assets, including rental properties and business accounts. The tax lien can also hurt your credit, making it difficult or impossible to take out new loans.

The first step when trying to get the lien removed is to contact a tax relief attorney immediately. The chances are low that you will be able to resolve this on your own, as by the time a lien is in place, the IRS has probably been in contact with you for a while. There are a few circumstances under which the lien can be removed, but an attorney will be most able to determine if one of these applies.

The first circumstance is when the debt has already been paid in full. If you are in need of contacting a tax attorney, chances are this has not already happened, but it is possible that the IRS will leave the lien in place even after the debt has been paid, in which case you will have to fight it. The second circumstance occurred when the IRS did not follow proper procedures when placing the lien. This can be difficult to prove but can get the lien removed.

If you were in bankruptcy when the lien was filed, you are also eligible to have the lien removed, as they cannot be placed on already-defaulted accounts. Lastly, if the statute of limitations in your area on tax collection has already passed, the IRS is not allowed to collect on the debt.

Anyone of these circumstances could result in getting your tax lien or levy reversed, but seek the help of an expert if you find yourself with a lien on your property. They stand the best chance of getting this IRS penalty removed. And remember, as always: don’t panic. There is always a chance of remediation when facing an IRS penalty, and liens are no exception. Keep your head up, and keep hope.