What is an IRS Federal Tax Lien?

The IRS federal tax lien is a claim registered against property for the non-payment of back tax liabilities. Unlike a bank or wage levy, the tax lien does not deprive the taxpayer of the property or the right to transfer this property. If you owe back taxes then you may ultimately become the victim of one of the most powerful tools in their collection arsenal: IRS tax liens. And know that the larger your back tax debt liability, the sooner the IRS may issue this federal tax lien against your property. The formal notification is called a Notice of Federal Tax Lien and this is a ?public notice? that you owe the IRS money. Now your IRS tax problem will no longer be a ?private or confidential matter?. Anyone considering doing business with you like banks, various financial institutions, customers and vendors will know that you owe the IRS back taxes. That is the reason so many delinquent taxpayers hope to stop IRS tax liens before this matter goes on the public record at the County Clerk?s office in their particular county. Once the IRS federal tax lien is registered, then the IRS has now become a secured creditor right behind other prior secured creditors, but ahead of all your unsecured creditors. And to make matters even worse, this IRS tax lien will go on your credit report. It will negatively impact your credit score, obviously making future financing for home, vehicle or other types of loans very difficult. Very often, this federal tax lien can make you completely ineligible to borrow, even at ridiculously high rates of interest, depending upon the guidelines imposed by the lender.

What are your options to secure an IRS lien release?

The Internal Revenue Service will release a Notice of Federal Tax Lien within 30 days after you satisfy the tax due (including any interest charges or other additions) by paying the tax debt or by having it adjusted, or within 30 days after the IRS accepts a bond that you submit, guaranteeing payment of the debt. It is prudent to seek out the advice of IRS tax specialists for IRS tax liens. The negative impact can be far reaching, as noted above in the first section. Keep in mind that an IRS lien release will typically occur ten years after the tax is assessed, provided the IRS does not file it again. However, contacting IRS tax specialists to review your tax lien problem is certainly advisable over ?waiting out the 10 year period? for the IRS federal tax lien to automatically or self-release. There are standardized procedures in place for IRS lien releases, discharges and subordination. In qualifying situations, the IRS will normally remove the tax lien within 30 days and the taxpayer may receive a copy of the Certificate of Release of Federal Tax Lien.

What can be done if you cannot afford to pay the tax debt in full?

Obviously, if you had the funds to remit on your back tax liability, you would not find yourself in this predicament where you are staring in the face of an IRS federal tax lien. As discussed above, the IRS will issue an IRS lien release if you satisfy the tax debt due by paying it or having it ?adjusted?. This essentially means that the IRS is open to a tax settlement, also called a ?compromise offer?, for an amount less than your full back tax liability. While this may sound quite easy, do not plan on this being a simple situation. If you are hoping to reduce your delinquent tax debt, there are several programs you may qualify for. IRS tax specialists have the in depth knowledge and experience to review your financial situation as it pertains to the Offer in Compromise program (both personal and business) as well as IRS Penalty and Interest Abatement. Both these programs offering IRS tax debt relief do reduce the overall tax liability. However, making or submitting an ?offer? to the IRS will not affect the IRS tax lien which remains effective until your offer is formally accepted and the amount is full paid to the IRS. At that point, a taxpayer may request the IRS lien release. Again, IRS tax specialists handle IRS tax liens a daily basis. They are abreast of all the complexities to insure your best chance at success for an accepted reduced offer and the ultimate release of your IRS federal tax lien.

Presently the real estate market is in a pretty bad way, this falls in line with the fact that there is a financial crisis in the US. Not to say that anywhere in the world is any different and world markets are all suffering a credit crunch. When this kind of financial situation exists generally one of the most immediate markets to suffer is the real estate market.

People can no longer afford the home that they live in and banks foreclose on defaulted mortgages. However there is another aspect that has to be considered in the US, because the IRS has the right to place liens on a person?s property when their income or property taxes have not been paid. An IRS lien takes precedence over any other lien and if the back taxes are not paid, then the homeowner could see the IRS taking his property away from him to meet the debt.

Tax foreclosure sales of properties that the government has taken in lieu of unpaid taxed are held around one to four times a year. These are suction sales and people who have ready funds to invest are looking at this market as a means to generated profitable returns on investment.

These tax foreclosure sales make many properties available to the investor, properties are sold “as-is” but investors are allowed to view any properties before the sales take place. Some people think that watching properties being sold at tax foreclosure auction sales is fun; they even make it their hobby! It is one way to learn how the auction sale process works, this is a useful learning tool if you are a new investor and thinking of entering this particular investment market. It is actually possible to watch a tax foreclosure sale and see how much profit can be made in just a short period of time.

Some investors arrive fully prepared; these are obviously veterans in this business, while others arrive with no preparation whatsoever. It is far better to be prepared on arrival at tax foreclosures sales than not. But this is the case with any situation really. Forewarned is forearmed, pre-finance should be in place and any property that the investor wants to bid on, should have been inspected.

Some people believe that tax foreclosure sales are highly competitive situations, with hundreds of people flocking to make bids. This is not always the case, something only a handful of investors attend and this makes the bidding much easier, however the sale may also be postponed due to lack of competition. If the property for sale cannot achieve the suggested sale price then be prepared for its sale to be postponed, the IRS are not just going to let it go without knowing they will recover their losses. As you know the wheels of government turn very slowly, so be prepared for as many postponements as it takes.

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