The Road to Tax Lien Relief

chicago tax lawyerIf a tax lien is imposed for failing to file a tax return or failing to pay income taxes that are due, the IRS offers tax lien relief through its Fresh Start Program.

Tax Liens

If an individual owes federal taxes and fails to pay them on time, the IRS can file a tax lien as a way to collect the debt. When a tax lien is initially imposed, it’s only between the IRS and the taxpayer, but it becomes public record if the taxpayer doesn’t attempt to resolve it within 30 days. Once the tax lien becomes public, it can create a variety of problems for the taxpayer because it becomes visible to employers, banks, and creditors. A tax lien can impact a person’s ability to find a job, acquire housing, and get loans and credit cards. It can lower a person’s FICO score by as much as 100 points. As long as a tax lien remains, it can attach to all existing assets including personal and business real estate, personal property, motor vehicles, bank accounts and securities, and assets acquired in the future.

The Fresh Start Program

The IRS can impose a tax lien on any taxpayer who owes more than $10,000 in unpaid taxes, and they have up to 10 years to collect on the debt. In 2011, the IRS established its Fresh Start Program to help individuals and businesses with tax debt. The program raises the minimum tax debt for tax liens to $10,000, provides ways to pay off tax debts for $50,000 or less, and helps taxpayers remove tax liens. When a taxpayer owes unpaid or delinquent taxes, the Fresh Start Program helps qualifying taxpayers pay off their tax debt through installment payments or settle their debt for less than the total amount owed. The program also provides a way to withdraw a filed Notice of Federal Tax Lien by filing a one-page form (Form 12277), if certain conditions exist:

  • The IRS filed the Notice of Federal Tax Lien prematurely
  • The Notice of Federal Tax Lien was filed after a taxpayer entered into an installment payment agreement with the IRS
  • The taxpayer has entered into an installment agreement by direct debit
  • Withdrawal of the Notice to File Tax Lien expedites collection of the tax debt

If you have a tax lien, contact an attorney at Gordon Law to discuss options for removal.

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