Welcome to our Ask Phil series, where each week our lead Tax Attorney, Philip Hwang will be answering your questions about various tax topics such as IRS enforcement, liens and levies, tax scams, and more. With Phil’s extensive background as a tax attorney, you won’t want to miss this valuable information!
Today, Phil discusses liens, including when to worry about them and how to get them removed.
What is a Tax Lien?
A lien is a legal claim against all of your property when you fail to pay a tax debt. A lien is private information only known to you and the IRS. That is until they file a Notice of Federal Tax Lien. This essentially means that the IRS alerts all creditors that they have the first claim over all of your assets, from property to vehicles to bank accounts. At this point, the federal tax lien becomes public information, meaning that anyone can find out about your tax debt. This can affect your access to credit, business opportunities, and even employment.
How to Get a Lien Removed
Once a federal tax lien is in place, the best way to get it removed is to pay your tax debt in full. Once the balance is paid in full, the IRS typically releases the lien within 30 days. However, sometimes other options may be available. For example, a process called lien subordination allows creditors to outrank the IRS. This basically makes it possible for you to refinance your home. It’s important to note that this does not remove the tax lien attached to your property. To find out if you’re eligible for lien subordination, you should file IRS Form 14134, Application for Certificate of Subordination of Federal Tax Lien, with the help of a knowledgeable tax professional.
Tune in next Friday as Phil covers the important topic of penalties and interest!
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