Robert J. Fedor, Esq., L.L.C.

Advice for taxpayers facing an IRS tax lien

Americans are required under state and federal law to pay taxes. Failure to do so can result in fines, penalties, criminal charges and even prison time. One of the most common penalties often brought against those individuals who fail to pay taxes is a lien on a home or other property.

Individuals who owe more than $5,000 in tax debt may be subject to a lien by the Internal Revenue Service. Should the IRS decide to pursue a lien on a home or property, the agency is required to provide written notice of such action. If a taxpayer fails to pay the tax debt amount owed, the IRS lien goes into effect 10 days after formal written notice. 

An IRS lien allows the federal agency to make a legal claim to an individual's home or property. Having record of such a lien can damage an individual's credit score and make it difficult to impossible to refinance a home. Individuals facing an IRS lien do, however, have options.

The first and most obvious option is to pay the tax liability amount in full. Once the tax debt has been satisfied, the tax payer must notify the IRS and request that the lien be withdrawn. Paying the owed tax amount in full, however, is often not a viable option for many individuals facing tax debt problems.

Setting up an installment plan is often a more realistic option for those with tax debt. Doing so allows the IRS to automatically withdraw funds from an individual's paycheck or bank account. Once an installment plan has been set up, an individual typically only has to make a few payments before the tax lien can be withdrawn and erased from record.

Another option for those with an IRS lien is to sell a home or property. The IRS would then recoup monies related to the tax debt from the proceeds of the sale. Individuals who plan to sell property with an existing lien must work with the IRS and be granted permission related to the sales process.

Source: Fox Business, "IRS Filed a tax Lien on Your Home -- Now What?," Michele Lerner, Aug. 7, 2013