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How can I deal with a federal tax lien?

On Behalf of | Jul 31, 2022 | Federal And State Tax Collections |

The federal government may take different measures to collect unpaid taxes from you. You may find one day that the IRS has put a federal lien on your business and/or other property you own. Since a lien can impact your ability to acquire financing and negatively impact your credit, it is in your interest to remove the lien as soon as you can.

The IRS describes how taxpayers can handle the problem of a lien. Fortunately, there are a variety of options, one or more of which might fit your situation.

Pay the outstanding amount

If you have the funds available, a complete payment of your unpaid taxes will result in the IRS withdrawing its lien. The government should remove its lien no later than 30 days after you have provided payment.

Discharge the lien

In the event you cannot pay your tax debt right away, you may petition the IRS to take the lien off certain kinds of property you own. This does not get rid of your obligation to pay your outstanding taxes, but you may free up some property so you can use it without the burden of a government claim on it.

Subordinate the lien

Going through subordination means the IRS is willing to let other parties prioritize their claims on your property. Some debtors pursue this option so they can get a mortgage or a loan. In your case, subordination may help you improve your financial picture enough to pay back the IRS.

Withdraw the lien

Another option is that the IRS might withdraw its lien but not void the amount you must pay. Basically, the IRS issues an assurance that it will not contest claims from other parties on your property. This may give you some breathing room as you attempt to gather funds for your outstanding taxes.

Even if you cannot pay your late taxes at the moment, there may be ways to handle your lien so it does not adversely affect your business. In time, you could permanently resolve your tax debt and get your business back in order.