The IRS and State taxing agencies have the power to collect back taxes by placing a Lien on all of the taxpayers’ real and personal property. When a person owes back taxes, the IRS and State Tax Agencies can place a Tax Lien on a person’s assets after meeting certain statutory requirements. The Tax Lien attaches to all rights, title and interest of the taxpayer. Once the IRS or a State Tax Agency has a Tax Lien on all of a taxpayer’s assets, they may enforce that lien by seizing his or her assets.
A Tax Lien is filed by the Government to protect its interests. Recorded with one or several county or state recorders, a Tax Lien alerts the world that you owe back taxes, and is generally devastating to the taxpayer’s credit. Tax Liens make it very difficult to obtain credit or to buy/sell real estate.
The effect of the Federal Tax Lien statute is that when any person fails to pay any assessment of tax, plus interest, penalties, or costs, a Tax Lien in favor of the United States arises upon all property and rights to property. That property, whether real or personal, tangible or intangible, belonging to the taxpayer is effected by the Lien. Even if the taxpayer makes a partial payment, a Tax Lien can arise for the balance of the tax.
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Although the taxing agencies are extremely reluctant to release or modify Tax Liens, I might be able to get the government to subordinate its Tax Lien to a lender, thus allowing the client to borrow money against his assets to satisfy all or part of the Lien. There are also provisions to remove Liens from certain property even if the Government does not have a financial interest in the property. This removal of the Lien is called “a Discharge of the Lien”. In addition, I also verify that the tax agencies have met all legal requirements for a legal Tax Lien filing. If any defects are discovered in the Tax Lien process, I will immediately appeal the filing of the Lien.
I have also been successful requesting the Lien be withdrawn or released for a variety of Reasons. Some clients just simply made an error or they had a traumatic event in their life that prevented them from paying their taxes on time. If successful, the Lien filing will be expunged from your credit report/credit score.