The Tax Lien Powers of the IRS

  • Robert S. Thomas,
  •   Taxation
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Are you unable or unwilling to pay your high tax bill to the IRS? If your answer is yes, I’m sure that you have legitimate reasons for not paying. However, if you have already received a demand for payment from the IRS, I would suggest that you immediately contact an attorney. The reason I say this is because the IRS may impose a Federal Tax Lien on all of your property.

What is a Federal Tax Lien?

A Federal Tax Lien is one of the most powerful collection tools the IRS has been granted. It is a legal claim that attaches to all of a taxpayer’s property to secure an unpaid tax obligation. Essentially, it is a warning that pops up anytime anyone checks your credit report or tries to purchase any sort of property from you. It tells everyone that the IRS has a claim on virtually everything you own.

As the lien appears on your credit report, you may be thwarted in any attempt to borrow money, to rent a home, or to get a new job. Further, if you try to sell property (such as real estate) any diligent buyer will discover that the federal government has a claim on that property. This will scare off virtually any buyer.

When Does the IRS Issue a Lien?

The Internal Revenue Code (IRC) Section 6321, states that:

“If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.”

In other words, if you owe a tax obligation, the IRS makes a demand for payment, and you fail to pay, the government has the power to place a lien on “all property and rights to property.” Specifically, the IRS will file a “Notice of Federal Tax Lien” to inform all creditors of the lien. This lien will be dated back to when the unpaid taxes were originally assessed.

How Long Does a Tax Lien Last?

The IRS has a duty and interest in collecting as much money as possible. For this reason, the IRS is going to maintain a lien on your property for as long as possible. A tax lien lasts until one of the following conditions is met:

  1. You pay your tax obligation or reach a settlement agreement with the IRS.
  2. Ten years pass and the statute of limitations bars the IRS from collecting on you tax obligation. However, this statute of limitations may be extended if you enter into an Offer in Compromise (OIC) with the IRS.

Don’t wait for the IRS to place a lien on all of your property, act now and contact an attorney. I have handled complex tax matters for more than twenty years and have a Master of Law Degree (LLM) in Taxation, and a license to practice in the United States Tax Court. I understand the IRS and can help you in any tax-related dispute. Contact the Law Offices of Robert S. Thomas at 847-392-5893 to set up a consultation or visit our website to schedule an appointment today.

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