Lien on all property and rights to property

The Internal Revenue Code provides that when a tax is not paid, a lien automatically arises and reaches all property of the taxpayer (and it does mean ALL), wherever that property is located. This gives the IRS the right to collect the tax by taking those assets. In many cases the IRS also moves to record its lien in the form of a Notice of Federal Tax Lien. This gives actual and constructive notice to all those who might purchase, assets from you or loan money to you. And, of course, the filing of the lien notice is picked up by the various credit reporting agencies so it winds up on your credit report.

Avoiding liens

The Internal Revenue Code and the IRS's own procedures, set forth in the Internal Revenue Manual, give properly informed taxpayers opportunities to prevent the filing of tax lien notices, but you must be pro-active and work with the IRS in an effective and timely manner. Failure to do so will inevitably result in the filing of lien notices in the public record, after which is it very difficult to get the lien removed.

Removing or limiting liens

In many cases, after a lien has been filed, it becomes important to have the lien released, or to have certain assets removed from the effect of the lien, so that property can be sold or refinanced, or so that the taxpayer can obtain a new loan to resolve his tax problems. In these cases, upon proper application with the required supporting documentation, the IRS can issue several kinds of "certificates" with respect to previously filed liens:

• Certificate of Release:
• 
  -- completely extinguishes the lien.
  
  
• Certificate of Discharge:
• 
  -- removes certain property from the lien.
  
  
• Certificate of Subordination:
• 
  -- relegates the lien to a lower priority.
  
  
• Certificate of Nonattachment:
• 
  -- clarifies the fact that a person of similar name against whom a lien is filed is not the taxpayer.
  
  
• Certificate of Withdrawal:
• 
  -- eliminates public notice of the lien.
  
  

If you owe taxes and have been notified that a lien will be or has been filed against you, it is time to take action and we can help. Or if a lien is on record and you need to sell or refinance your house or business and the lien is interfering with your ability to do so, we can resolve the situation for you.

WANT MORE INFORMATION?

Federal Tax Liens -- Part I and Federal Tax Liens -- Part II, published by the Maryland Society of Accountants in "The Freestate Accountant" as part of Mr. Haynes' series on "Dealing with the IRS Collection Division."