An IRS tax lien can be issued if a taxpayer owes unpaid state or federal income tax. The lien can be released if the debt is paid, a bond is accepted, or special circumstances exist. A lien can be appealed or withdrawn if a payment plan is set up. The lien affects credit rating and can be a public document.
An Internal Revenue Service (IRS) tax lien can be issued when the entire amount owed to the government has been paid or if the IRS accepts a bond guaranteeing payment of the debt. An application to release a property lien can be granted even if it has been 10 years since it was filed and the government has not renewed it. U.S. tax law provisions also allow for the issuance of an IRS tax lien if the taxpayer was bankrupt at the time of filing, the government missed a deadline for filing, or when the IRS makes a mistake in imposing a lien on property.
An IRS tax lien generally remains on the property until it is paid in full, along with any penalties and accrued interest, unless one of the special circumstances exists. In these cases, you can send a letter to the IRS loan processing unit in the state where the lien was filed requesting a federal tax lien release certificate. If an officially registered copy is needed, the taxpayer should contact the filing office of the state in which he resides.
By law, the IRS must issue an IRS tax lien 30 days after the debt is paid. If the lien remains on the property, a letter can be sent to the IRS Technical Services Group Manager. The document should include proof that the taxpayer has satisfied his tax liability, which may include an IRS receipt, canceled check, or other proof of payment. IRS employees will look into the matter and release the lien if the government determines it has been paid. The law gives a citizen the right to sue the government, but not IRS employees, if he purposely fails to issue a tax lien within the prescribed time frame.
An IRS tax lien can be placed on homes, vehicles and other assets 10 days after a taxpayer is notified that they owe unpaid state or federal income tax. The taxpayer can appeal the decision if he believes the IRS was wrong or missed the deadlines to collect unpaid taxes. Sometimes, the lien will be withdrawn if the taxpayer sets up a payment plan that benefits the government and the taxpayer, or if the IRS determines the debt will be paid off faster if the lien is removed.
An appellate officer decides whether the IRS tax lien should remain or be discharged. If the taxpayer still disputes the findings, he can request a hearing to discuss the case. The hearing is usually held within 30 days.
When an IRS tax lien is filed, it becomes a public document available to creditors and the general public. The lien could also apply to any property the taxpayer subsequently purchases. While the IRS tax lien is in effect, the taxpayer may not be able to get a loan or credit card, and his or her credit rating may suffer.
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