Tax Liens

What is a federal tax lien?

A federal tax lien is a claim that the government has to your property. The Internal Revenue Service (IRS) may make the lien public by filing a Notice of Federal Tax Lien (NFTL). The purpose of the NFTL is to give public notice that the taxpayer owes money to the IRS. However, the lien itself does not have any effect, except to potentially cause embarrassment.

An NFTL primarily affects people when they want to sell their house. This is because liens determine where the proceeds from the sale will go. The first lien on a property usually comes from a mortgage company, so part of the sale proceeds will pay off the mortgage balance. The IRS will receive some or all of the residual money if there are no other arrangements.

The bigger problem with a Notice of Federal Tax Lien is that a sale usually cannot happen while the lien is on a property. The IRS must first withdraw the NFTL, or release, subordinate, or discharge the lien.

Withdrawal

The best solution to a Notice of Federal Tax is a withdrawal by the IRS, which means the IRS acknowledges that they filed the lien in error. In theory, there are several ways to achieve this result. In practice, only a 60-month Direct Debit Installment Agreement will do the trick. Once the balance due falls below $25,000 after several payments, a lien withdrawal can be requested.

Call us for assistance with a Lien Withdrawal.

Release

A tax lien will be released once the tax debt has been satisfied. This may be the result of:

paying in full
paying the last installment amount
paying the final Offer in Compromise amount
collection statute expiration
etc.

Sometimes the IRS is slow to acknowledge the Lien Release. We can help. Contact us.

Subordination

Subordination is usually used for refinancing a mortgage. The IRS needs to be convinced that the refinancing is to their advantage. Then, they will allow the new lender to have priority over the IRS.

Call us for help with a Lien Subordination!

Discharge

The IRS may be willing to discharge the tax lien on a specific property if the taxpayer has more than one property. However, certain conditions must apply for the IRS to agree to a discharge. Some options for pursuing a discharge are:

The IRS receives all net proceeds of the sale
The remaining property has more than twice the value of all liens
The net value of the property is zero
The owners of the property are not named on the lien

We can help with your Lien Discharge. Contact us now!