Liens on personal property and assets
Most people think a lien is just filed against your real estate property, but that is not, in fact, the case. A lien applies to real estate, personal property and your financial assets—those you own at the time the lien is filed and any property obtained during the lien period.
If you currently own your home and are trying to sell it, your Federal Tax Lien will alert the title company that there are funds that are required to be paid to the IRS before you receive any funds at closing. If you are selling your home with plans to purchase another and you owe the IRS back taxes equal to or exceeding the equity you would receive, then you will not have the funds to buy a new home. If you are selling your home and the proceeds will not full pay your debt, the IRS will still collect their money first based on the lien.
How liens affect your credit
IRS liens can hinder your ability to obtain credit in the future as it not only shows up on your credit report but actually affects your credit score as well—sometimes by as much as 100 points. In some cases, the Federal Tax Lien will even survive the filing of a bankruptcy and show on your credit report for years after the bankruptcy has been discharged.
Releasing a lien
The best way to remove a lien from your Denver-area property and assets is to pay your debt in full. If that’s not an option, you can satisfy your lien through a monthly payment plan or Offer in Compromise or by establishing a hardship to show you are unable to pay your debt. In addition, liens will usually expire after a period of 10 years, which is the statute of limitations for collecting a tax debt.
After you have paid your taxes in full or satisfied your lien in another way, the lien can remain on your credit reports for up to seven years—affecting your credit despite the resolution. You can request a letter from the IRS that shows you have paid the lien in full, which you can then send to credit agencies to show the lien has been released.
True Resolve is ready to help.
It’s never wise to avoid a tax issue. And you don’t need a tax attorney to help you resolve them. Contact the qualified tax advisors at True Resolve for help in satisfying your lien. Our Denver-based Enrolled Agents have the expertise and experience to work with the IRS on your behalf.