What You Need to Know About IRS Tax Liens

According to the Internal Revenue Code, known as the Tax Code or “IRC,” you may have some legal rights before the IRS attempts to lien your property, during the tax lien process, and afterward.

What is a Federal Tax Lien?

When you underpay or don’t file your federal income taxes, you will owe the Internal Revenue Service (IRS) money that may include unpaid taxes, estimated income taxes, penalties, and interest. To make you pay, the IRS can file a tax lien against your real and personal properties, can garnish your paychecks and bank accounts and use other debt collection methods.

Your Rights Before the IRS Files a Tax Lien Against You

and Demand for Payment:
The IRS must provide you with
actual, written notice before attempting to lien your personal or real
property. Known as a “Notice and Demand for Payment,” the IRS must
give you written notice of the amount you owe, plus 10 days to
pay your delinquency before it can take your property.

to Request Installment Payment Plan or Installment Agreement:
can request an IRS workout agreement to pay your unpaid taxes to give you time
to pay it in installments or pay in full, lump sum.

Your Rights After the IRS Files a Tax Lien Against You

Lien Notice in Writing:
After the IRS decides to
lien your property; it must give you written notice of such lien filing within
five days by registered mail or by placing the notice on your door.

Your Rights to Request Automatic Lien Release IF…

Payoff/Bond: You
have a legal right to request a lien release within 30 days of paying your
delinquent taxes or posting a bond. Typically, the IRS does this automatically,
but if the government hasn’t released your lien within 30 days after you’ve
posted your bond or fully resolved your unpaid tax bill, you can demand

of Limitations:
This is a period barring any party from taking any legal
action. In most cases, if the IRS hasn’t fully collected your delinquent taxes
after filing a lien, it must refile the tax lien or release it.

Creditor’s Rights During the IRS Tax Collection Efforts

of Federal Tax Lien:
If you don’t resolve your federal tax delinquency, the IRS
will most likely file a lien against any personal (levy) or real property you
own and sell it by auction. During the collection process, the IRS will give
your creditors a “Notice of Federal Tax Lien.” The federal notice of tax
lien gives your creditors an opportunity to adjust your credit, and your credit
rating can suffer.

Your Rights During the Entire Tax Lien Process

Under federal law, you have several rights to challenge your assessment or unpaid tax bill. Make
sure you do it during the limited periods and follow the procedures, including using written correspondence. You can challenge your tax liens by using the “Collection Due Process” hearing procedures determination or request a manager formally review your file.

There are several possible affirmative defenses, including the failure to adhere to the statute of limitations or various equitable defenses, including the innocent spouse doctrine. You can access a free informational brochure published by the IRS that details your rights to appeal in “Publication 1660: Collection Appeal Rights.” also has great information that you can review at no cost. Find it here.

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