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How Does An IRS Lien Affect Your Financial Life?

How Does An IRS Lien Affect Your Financial Life?

What is an IRS Lien?

An IRS lien is a legal claim that the government places on your property. If you do not pay your taxes, then the IRS will place a lien on your property. This is typically a last resort. The IRS will give you a Notice and Demand before they place a lien on your property.

If you do not respond within the specified amount of time, then the IRS will issue a silent or statutory lien. The reason that it is often referred to as a silent lien is because no one will know about it. However, if you do not respond to the IRS, then they will eventually place a federal lien on your property.

Keep in mind that the IRS is considered a supercreditor. Unlike other creditors, the IRS does not need a judgment to collect the money. It is important to note that a lien is not the same thing as a levy. The government will seize your property if there is a levy placed on it.

How a Lien can Ruin you Financially

If you have a lien on your property, then this is not something that you want to ignore. The IRS can take your assets, bank account and garnish your wages. This lien will also end up on your credit. If this ends up on your credit, then you likely will have problems getting a loan or credit card in the future.

If a lien is placed on your business property, then your business will be in jeopardy. Not only can you lose your business property, but you can also lose all of the rights to your business. Many people think that they can get rid of a lien by filing for bankruptcy. However, you may still have this lien after you file for bankruptcy.

You may also lose your social security benefits. That is why you should deal with a lien as soon as possible.

How to Deal with an IRS Lien

Pay Your Full Balance

The best way to get rid of an IRS lien is to pay off the full balance. Your lien will be released 30 days after you have paid off your tax debt.


You can also request a withdrawal. There are several things that you can do in order to get your lien released. If your tax liability has been satisfied and you have complied with federal tax laws for at least three years, then you can get your lien released. You should also be current on your federal tax deposits and estimated payments.

You may also be able to request a withdrawal if you have a payment agreement. The following requirements must be met:

- You are a qualified taxpayer
- Your total tax debt is less than $25,000
- If you owe more than $25,000, then you may pay this balance down and then request a withdrawal
- You have a Direct Debit Installment agreement that will pay the full balance off within 60 months
- You comply with the payment and filing requirements
- You have made at least three debit card payments
- You have not defaulted on any payments.

How to Avoid Getting an IRS Lien

Because an IRS lien can complicate your life and finances, it is best for you to avoid getting one. The best way to avoid getting a lien is to pay all of your taxes in full and on time. If you cannot pay your taxes, then you should contact the IRS. Ignoring the correspondence will only make your situation worse. On the other hand, if you communicate with the IRS, then they will likely be able to work with you. There are a number of payment options available.

You can set up a monthly payment plan. You will make a monthly payment until your tax debt is satisfied. You may also be able to get an offer in compromise. This allows you to settle your tax debt for less than what you originally owed. Furthermore, if you are struggling financially, then you may be able to temporarily delay payments until your financial situation improves.

Mary King
Attorney Mary King

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