When an individual is delinquent in paying his or her taxes, the Internal Revenue Service (IRS) may impose a tax lien against that individual’s assets. Generally, a tax lien is a “last resort” for the IRS to take in an effort to recover late tax payments from an individual. By imposing a tax lien, the IRS essentially stakes a claim in the noncompliant individual’s asset. This does not mean the IRS will take the asset from the individual, but that if the individual’s property goes into foreclosure or another event, such as bankruptcy, leads to his or her assets being liquidated to satisfy his or her debt, the IRS has top priority over other creditors seeking repayment from that asset.
Finding a tax lien on your credit report can be startling, but it should not be a surprise. It is also no reason to panic – you can have a tax lien removed from your credit report, and this process is far easier when you work with an experienced tax lawyer.
Typically, a tax lien is imposed when an individual owes $10,000 or more in income taxes. However, they may be imposed for smaller amounts. A tax lien is not the same as a tax levy, the right the seize money directly from a taxpayer’s bank account or paycheck to satisfy his or her unpaid taxes.
A tax lien comes after the IRS takes multiple steps to recover the taxes the individual owes. The first of these steps is to assess how much the individual owes. The IRS then sends a bill to the individual demanding payment. If the tax bill is not paid within 10 days or the individual agrees to a repayment plan with the IRS, a tax lien is imposed.
When a tax lien is in place against your property, it does not go away until you have repaid the money you owe. Fulfilling a tax lien does not mean it is automatically removed from your credit report, though. A released tax lien can remain on an individual’s credit report for up to 10 years.
When you have a tax lien on your credit report, there are a few ways you can have it removed. If you paid the taxes you owed in full, file the necessary documents with the IRS to have it removed from your report. If the lien is on your report due to a clerical error, contact the IRS immediately to have it addressed and removed. You may also be able to have the lien withdrawn through the Fresh Start program if your outstanding balance is below $25,000. Talk to an experienced tax lawyer about the options you have due to your situation. You might be eligible for a withdrawal if the lien is no longer enforceable due to an expired statute of limitations.
For guidance and legal representation in your interactions with the IRS, work with an experienced tax lawyer. To start working with a member of our team at North Suburban Legal Services LLC, contact our office to schedule your initial consultation.