Insights: Article

Frequently Asked Question: How can I get a tax lien removed?

Dealing with IRS Trouble: A Fresh Start

By Andres Jaquez, Leslie Spires

February 15, 2019

The IRS files a tax lien with the county or parish government or Secretary of State to accomplish basically three things:

  1. Secure the tax debt, protecting the IRS’s ability to collect the unpaid tax debt.
  2. Make the tax lien a matter of public record, so that other current or potential creditors are put on notice.
  3. Move the IRS into a priority position for collection of the tax debt.

All three credit bureaus have stopped reporting tax liens, so there is the possibility a tax lien filed against you will not completely destroy your credit score. However, having a tax lien filed against you can cause big financial problems, particularly if you are trying to purchase a home, car or get business financing.

Lien Release, Discharge and Subordination
While the best way to get rid of a tax lien is to do everything possible to not allow it to get filed in the first place, that’s not always possible. So, how are tax liens removed?

Release: The easiest way to get a lien removed is to pay off the full amount of tax, penalties and interest owed. Realistically, that’s not always possible. An installment agreement to pay the tax can put taxpayers on the right track, but the tax lien won’t be released until the tax debt is satisfied, which would most likely be at the end of the installment agreement. If the tax debt, for whatever reason, can’t be or isn’t collected by the IRS, the statute of limitations on the debt may expire. In that case, the lien is considered unenforceable, and the taxpayer can request that it be released. The IRS may also, under the right set of circumstances, decide to release the lien if the outstanding balance is under $25,000, but don’t count on this happening without you taking action.

Discharge: In cases where the taxpayer can sell real property or other assets to satisfy the tax liability, the IRS may consider discharging that property or asset from the lien, as long as the taxpayer agrees to use the proceeds of the sale to pay the tax debt.

Subordination: A taxpayer may choose to refinance their mortgage or apply for a second mortgage or other financing in order to pay off their tax debt. A tax lien can prevent this from happening. But, the IRS may decide that a form of subordination, where the IRS in a sense lifts the tax lien to allow for a particular transaction, such as the refinancing, to take place. Subordination doesn’t remove the tax lien, however; it just allows a specific creditor to move in front of the IRS.

Why would the IRS do the subordination? By allowing the refinancing to be completed, the IRS gets the tax liability paid and the taxpayer can get their property refinanced. But, the IRS will need to see that extra funds for the payment of the tax debt will come as a result of the refinancing, otherwise the subordination will probably not be a possibility since the IRS has nothing to gain from it.

There are many solutions available to address a tax lien, before or after it is filed. Finding the right solution that works for your situation is important. Contact our IRS Dispute Resolution and Collections team for a free consultation.

We are here to help you protect your business or assets and avoid losing what you’ve built.

Let us take the worry out of dealing with the IRS.

Latest Insights

March 11, 2019
Taxpayers and businesses dealing with first-time tax debt may qualify for relief through the Fresh Start initiative.
February 21, 2019
Owing back taxes can be a scary situation, but there are options available to help you pay off your debt and not end up losing what you’ve built.
February 21, 2019
Learn why your CPA and an IRS Dispute Resolution and Collections team may be the best partners to help you deal with delinquent tax problems.
February 19, 2019
A bank account tax levy never comes at a convenient time, so it’s important to know your options.
February 11, 2019
If you receive a letter from the IRS, it’s important to open it right away. This article outlines different types of IRS correspondence and what each one means for you.
February 11, 2019
The IRS is garnishing your wages. Now what? We break down wage garnishment and steps you can take to deal with this practice.
Find A Location