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What is a federal tax lien and how may it affect my assets?

On Behalf of | Apr 5, 2022 | Uncategorized |

The Internal Revenue Service may place a lien on personal or business property. If you fall behind on taxes, the IRS may send you a notice of its intent to file a legal claim against your assets.

As noted by IRS.gov, the government may place a lien on financial assets and real estate. After assessing your tax liability, you may receive a Notice and Demand for Payment Letter. If you neglect paying the outstanding amount, it could result in aggressive action, such as the IRS sending you an official Notice of Federal Tax Lien.

How may a tax lien affect selling my property?

Credit.com notes that a lien becomes a searchable public record. Creditors and individuals who wish to review your property records may search and find a listing of the IRS lien.

A lien generally means that the federal government has priority over your property’s sale proceeds. Listing a home sale may require adding the amount owed toward a lien to the asking price. Potential buyers may, however, attempt to negotiate down to a lower amount after finding an unpaid tax lien on a home’s public record.

How may I remove a tax lien and sell my assets?

According to IRS.gov, paying a tax balance results in a lien’s removal within 30 days. Some taxpayers, however, may qualify for a lien withdrawal. Although it does not remove a tax obligation, it may remove the lien from a property’s public record. In some cases, property owners may apply for a discharge, which results in the IRS removing its lien from a specific asset.

If you receive a notice that the IRS filed a tax lien, you may not have lost your ability to sell your property; you may file an appeal. Removing a lien’s attachment to your assets may, however, take time and require negotiation.

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