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What Does a Notice of Federal Tax Lien Mean and What Should You Do?

Posted by Brandon Keim | Oct 12, 2021 | 0 Comments

If you receive a Notice of Federal Tax Lien from the IRS, it means that the IRS is making a legal claim against your property to secure payment on a tax debt. The lien is a public document alerting your creditors that the IRS has a legal right to your property. Credit reporting agencies may include the lien in your credit report.

 What Should I Do if I Receive a Notice of Federal Tax Lien?

If you receive a notice of a lien from the IRS, don't ignore it. It doesn't mean that the IRS is taking your property right now, but you will have a limited amount of time before receiving a Notice of Intent to Levy from the IRS. At that point, the IRS is notifying you that it will begin seizing your property, bank accounts, and your pay or other income. To respond to the Notice of Federal Tax Lien, you have several options:

  1. Pay the full amount or make an offer in compromise. 

If you can pay, you should pay as soon as possible. However, if you qualify, the IRS may accept an offer in compromise. With an offer in compromise, the IRS may accept a lesser amount as payment in full for your tax debt. A tax professional can help you with this option.

  1. Set up a payment plan.

If you qualify, the IRS may allow you to set up a payment plan to pay your debt over time. You will still accrue penalties and interest, but you will avoid other collection efforts like liens and levies. 

  1. Ask the IRS to declare your account not collectible.

If the IRS determines that you can't pay your tax bill based on your financial circumstances, they may declare your account not collectible. This process will not eliminate your debt, and you will still accrue penalties and interest, but it will halt collection efforts and avoid a lien or levy while you're unable to pay.

  1. Appeal.

You can appeal the IRS's decision through Collection Due Process or the Collection Appeals Program, depending on the timing and circumstances of your tax debt. A tax lawyer can help you with this process.

Hire an Experienced Tax Attorney

Whatever you decide to do, if you've received a notice from the IRS of a federal tax lien, you need the skill and guidance of an experienced tax professional. You don't want to risk losing your home or other assets to the IRS, and you don't need to do this alone. If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.

About the Author

Brandon Keim

A Certified Tax Law Specialist, CPA, partner at Frazer Ryan Goldberg & Arnold LLP, and former Senior IRS Trial Attorney, Brandon Keim holds an LL.M. in Taxation from Georgetown University Law Center.

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