Tax Liens arise automatically by statute when you own money to the IRS and do not pay. The IRS does not have to do anything to create a tax lien. You create the tax lien when you do not timely pay the tax.This statutory lien becomes public information when the IRS files a Notice of Federal Tax Lien. A recorded tax lien seriously damages your credit rating. The liens are picked up by the credit reporting agencies. Note that the filing of the notice of tax lien does not create the lien, contrary to popular misunderstandings.
The statutory lien can be eliminated only by payment of the tax, discharging the tax in bankruptcy, reducing the tax and paying it through an offer-in-compromise, or having the statute of limitations lapse.
The Notice of Federal Tax Lien is eliminated only by an IRS Certificate of Release of Federal Tax Lien. Removing the Notice of Federal Tax Lien is difficult as long as the tax remains unpaid. The filing can be appealed with the IRS, but most appeals fail. The best strategy is a proactive approach before the lien is filed. Professional help is advised.
Partial payments will not reduce the amount of the tax debt stated on the Notice of Federal Tax Lien. Even if you pay most of the tax debt, the lien amount remains the initial full amount until the tax debt is paid in full.
Lien subordinations are possible if it helps the IRS get the tax paid. Contact us for help.