Taxpayers who owe the Internal Revenue Service some back taxes may be subject to a tax lien. A tax lien is a legal claim that the IRS may put on a taxpayer's property as a sort of security for any unpaid taxes owed to the government. It is a public record that may affect a taxpayer's credit rating.
So, can the IRS put a tax lien on a taxpayer's property in an instant? No. The IRS must first evaluate and find out how much the taxpayer owes the government in back taxes. After that, the IRS will send a demand notice for the taxpayer to pay back taxes. When this has been done, then the IRS can put a lien on the taxpayer's property.
When a taxpayer has a lien on his property, it is like a double-edged sword. The taxpayer cannot sell the said property with a lien and he also owes the IRS some money. Furthermore, the taxpayer's credit rating can be affected and at the same time, he could lose his home, car or any other property that has a lien. When a taxpayer's property is confiscated by the IRS, it can be sold at auction just to get the amount of unpaid taxes that have not been given to the government. Unless of course, the taxpayer pays what he owes.
So what does a taxpayer with a lien on his property supposed to do?
The most practical solution of course, is to check the notice for imposition of a tax lien to see if the information it holds is accurate. The taxpayer has to verify first whether what the notice contains agrees with one's own records of taxes paid.
If the notice for imposition of a tax lien is accurate, it is best to seek the help of a tax professional to help determine the amount the taxpayer owes the government and pay the unpaid IRS taxes to lift the lien on the property. The IRS will release the tax lien thirty days after the delinquent taxpayer has given the total back taxes due to the government. Aside from paying the principal amount, he is also expected to pay the penalties that may have accumulated before the IRS tax lien can be released. In worse scenarios where the taxpayer and the IRS meet in court, the taxpayer is also expected to pay the fines or fees that were charged in court.
However, there are cases when a taxpayer simply cannot pay the full amount right away. Then he may resort to an offer in compromise where the taxpayer can offer to pay a smaller amount of money to the government and ask the IRS to remove the tax lien. This usually gets accepted by the IRS as getting some money, no matter how small in payment for back taxes, is better than not getting any for a number of years.
A taxpayer can also request for a temporary removal of a tax lien just so that the property can be sold and he can pay the taxes he owes the government. This is a great option as the tax lien can be lifted and the taxpayer can sell his property for some amount and eventually pay back what he owes the government.
It is also wise for a taxpayer with a tax lien on his property to get rid of the signs of the tax lien on his credit report once he has settled all his accounts. This can be done by submitting a duplicate copy of the request to remove the tax lien to TransUnion, Equifax and Experian. The tax lien can then be erased from his credit report, making his credit rating acceptable once again.