When the IRS slaps a tax lien against your property over non-payment of a tax debt, it can wreak havoc on your financial situation and possibly hamper your ability to obtain credit. Fortunately, there are a number of ways to minimize the damage that an IRS tax lien can cause while you work to resolve your tax issues. The Highland Tax Group will do a full evaluation of your tax situation, advise you of your tax lien resolution options, and work on your behalf to get the lien relief to which you are entitled.
If you fail to pay your taxes in a timely manner, the IRS may issue a public Notice of Federal Tax Lien. With the lien in place, the IRS lays claim to the proceeds of the sale of any real estate, financial assets, and personal property you have, up to the amount of your tax debt. For example, if you own a house and decide to sell it, the IRS will take that money and apply it to your tax debt.
No. Since 2017, the credit bureaus no longer report tax liens on your credit report, so having a lien won’t affect your credit score. However, a tax lien does become part of your public record until your taxes are paid, so it can still impact your ability to get credit in a number of ways.
There are several options available to taxpayers to remove or minimize the effects of a tax lien on their finances:
Release — The best way to resolve a tax lien is to pay what you owe or arrange a settlement. Once the IRS receives payment, it automatically releases the lien so it no longer appears on your record. If it doesn’t happen automatically, we can petition the IRS to remove it.
Withdrawal — For certain eligible taxpayers, the IRS may withdraw the public Notice of Tax Lien. This takes the lien off your public record, but you’ll still owe the money.
Subordination — Another helpful approach is to arrange a lien subordination. This allows other creditors to take priority over the IRS, making it easier to obtain credit when needed. Again, this does not eliminate your tax obligation, but it does give you some financial relief.
Discharge — With a discharge, the IRS relinquishes its claim against a specific financial asset, removing it from the lien. This allows you to liquidate the asset without having the IRS take the money.
If an IRS tax lien is affecting your ability to function financially, sell assets, or obtain necessary credit, the Highland Tax Group may be able to help you find relief through one or more of these strategies. Contact us using the form below to see how we can help.