By: Brian Barto, EA
Our firm deals with clients who have tax debt. We handle issues such as tax liens and tax levies. It is not uncommon for taxpayers with a history of tax problems to have multiple IRS tax liens filed. One for each tax period for which tax is owed. First, it is important to understand the purpose of a tax lien. A lien is meant to protect the government’s interest. It is not meant to prevent the sale of assets. You can still sell assets, such as your home, but the IRS gets the equity (up to the amount of your tax debt).
Options for getting rid of the tax lien:
A lien becomes unenforceable after the expiration of the 10-year collection statute. The IRS has 10 years after the assessment of the tax to collect. Liens are self-releasing after the Collection Statute Expiration Date (CSED). Liens are self-releasing unless certain actions cause the lien to be re-filed. Events that extend the collection statute date include a pending installment agreement, offer-in-compromise, or bankruptcy. Each of these events causes an extension to the period in which the IRS can collect on the debt.
If the tax is fully paid or compromised the lien will be released. The IRS will generally release the lien about 30 days after a tax debt is fully paid.
Click here to learn about lien subordination if you wish to refinance your home. A “subordination” is where the IRS will allow another creditor to take a higher priority position over the IRS lien. This does not get rid of the tax lien but is necessary if you have a federal tax lien and wish to refinance your home.
Use Form 12277 (Application for Withdrawal of Filed Notice of Federal Tax Lien) if the IRS fails to execute the release.
It is also possible that if the CSED is about to run out, the IRS may send the case to the Department of Justice (DOJ) to file suit. Then the debt may turn into a judgment. This would normally only happen in high-dollar cases. DOJ may keep the case for collection, or if other periods are still with the IRS, send the whole thing back to the IRS.
Contact a good tax debt resolution professional to help you navigate the system and work with the IRS on your behalf.
At Tax Debt Resolution Services of Winchester VA, we help you eliminate your IRS issues and the stress the IRS has created in your life and help you get back to doing what you do best! We help our clients in Winchester, VA to resolve their tax debts! If you need assistance please feel free to contact me at 540-662-4432 or email@example.com.
24 Weems Lane
Winchester, VA 22601