Home | How to Handle a Federal or State Tax Lien

How to Handle a Federal or State Tax Lien

Sep 07, 2022

If you are an individual or business owner with outstanding tax debts, you may be facing the possibility of a Federal or State tax lien. This can be a daunting prospect and can impact your ability to obtain credit or manage your assets for the duration of your lien. In the case of a business, a lien is also attached to your business property and even your accounts receivable. The fastest way to remove a lien from your property is to pay the tax debt in full, which is often impossible for the taxpayer. After all, the main reason you likely have tax debt is due to financial difficulties in the first place. If you cannot pay in full, it will be necessary to seek out the appropriate tax debt solutions that will allow you to reach an agreement and perhaps even apply for a withdrawal, discharge, or subordination of the lien, depending on your circumstances.

Fun Fact! In the past, being subject to a personal tax lien also meant a severe, long-lasting penalty on your credit score. However, as of 2018, the top three credit reporting agencies no longer participate in this practice. The tax lien will still be reported when it comes to real estate-related transactions, so they do still pose a problem!

What is a Federal or State Tax Lien?

Let’s start with a summary of what a Federal or State Tax Lien involves. In simplest terms, a tax lien is a legal claim against assets belonging to an individual or a business with text debt owed to the Federal or State government. It helps to guarantee that the debt will be paid, either via agreed tax debt solutions or, if the debt is not paid, by taking steps to seize assets to recover the debt owed. The Federal government or the State can place a lien on property if the owner has unpaid tax debts. In most cases, it does not necessarily mean the property will be sold. Instead, the lien ensures that the tax authority will be first in line if other creditors are also seeking payment. It is common to hear about a lien being placed on a home. Still, placing a lien on a vehicle, the taxpayer’s investment account, a commercial property, or any other valuable asset is possible. A Federal or State Tax Lien can only be removed by paying the tax debt or reaching a settlement and requesting a Lien Withdrawal.

When Does a Tax Lien Expire?

A tax lien will generally expire with your tax debt after ten years, which is the general statute of limitations on your debt. The countdown begins from the date of your tax assessment, which should be noted on the Notice of Deficiency or tax bill. The date ten years on is your Collections Statue Expiration Date, or CSED. It is important to note that you can’t just sit and wait out these ten years! Your debt doesn’t automatically expire after ten years, as different factors can prolong that ten-year collection limit; knowing what actions can pause the ticking 10-year clock is key.

How To Remove a Tax Lien

A tax lien is released when you have paid your debt or, at the very least, made a substantial commitment to paying off the debt. This usually means you have made several payments on an agreed installment plan on time and have been up to date on subsequent tax filing. As previously noted, most taxpayers will not be able to pay off the debt in full; most will seek out suitable tax debt solutions to address the situation. Several steps can be taken to remove a lien if you cannot pay in full.

  • Lien Release - If the taxpayer can agree on tax debt solutions that allow an automatic monthly installment payment, the IRS may consider releasing the lien before it is fully paid off.
  • Lien Subordination - Lenders may be reluctant while a lien is in place if you need to refinance a loan or mortgage. It is possible to petition for a Certificate of Lien Subordination which will allow a new creditor to be placed ahead of the IRS. This isn’t going to resolve your tax debt, but it will enable you to refinance other financial commitments, which could free up money to address making payments towards the debt.
  • Lien Discharge - Discharging a lien will not resolve the tax debt, but it allows you to sell the property to a third party and use the funds to pay towards the debt. Not all taxpayers will be eligible for this particular option.
  • Lien Withdrawal - You can also petition to have the public notice of a Federal Tax Lien withdrawn. This does not settle the debt, the balance still needs to be paid, but the IRS will not compete with any other creditors for the rights to the property.

If you have concerns about a Federal or State tax lien on your property, we can help you explore potential tax debt solutions to resolve the issue. We have over 22 years of experience in the tax debt resolution industry and will be your trusted partner and advocate in getting your finances back on track.


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Your future and your family deserve the right protection. Golden Lion Tax Solutions will be your advisor and confidant throughout the entire journey. We guarantee to offer you or your business best-case solutions for your tax debt. We are by your side every step of the way. Start now and get your life back.

For help with your tax debts, email contactus@goldenliontaxsolutions.com or call 833-LION-TAX (833-546-6829)

Disclaimer: There are requirements that must be satisfied in order to qualify for some of the tax solutions we discuss on our website. Not all of our services will be suitable for every client. Golden Lion Tax Solutions is here to help you find the most appropriate solution to fit your situation.