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

Yes, the IRS can and will put a lien on your property if you don't pay back taxes

In a recent post we discussed an IRS-issued document called a Notice of Underreported Income. In this post we'll discuss another, more serious, type of notice an individual who has failed to respond to previous IRS inquiries may receive, a Notice of Federal Tax Lien.

This notice is to effectively inform a taxpayer that the IRS has assessed his or her liability and previous efforts to recover unpaid tax debt have been ignored or refuted.

The filing of a Notice of Federal Tax Lien is done to protect the IRS' financial interests by warning other creditors that the federal government's rights to attempt to recoup debt trump any other efforts.

A tax lien lasts for 10 years and can be renewed. Additionally, a lien not only applies to property owned and purchased prior to a formal notice being filed, but also any purchased or acquired after the notice is issued. While a lien is in effect, an individual's credit score is likely to suffer, making it difficult to obtain loans or credit cards. For business owners who are subject to an IRS tax lien, the lien applies to all business property and assets. Additionally, even in cases where an individual subsequently files for bankruptcy, the IRS tax lien may remain.

In cases where an individual is not able to pay the full amount of back taxes, he or she may be able to work out a reduced payment schedule with the IRS. An individual may also want to explore other options that can help lessen the sting of a tax lien by removing the lien from certain items or types of property.

In cases where an individual believes the IRS has erred in its assessment of back taxes, it's wise to hire an attorney who handles matters related to tax debt.

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