Tax liens are easy to understand if you break them down as is usually the first major enforcement used by the taxation authority (State or IRS). A lien is generally an interest claim or guarantee placed on private property to guarantee payment of a debt. Therefore, a tax lien is a lien imposed by Federal or state law to secure the payment of tax returns. A Tax Lien can be placed on your personal property and communicated to the world through a “Registrar” office or state record system. Usually, the IRS or the State will notify you in advance of any unpaid taxes. If you decide not to act (depending on the state as procedures vary) within 10 days, then a tax lien will be issued on your personal property. This publication discloses the government’s public records.
What’s Your Choice?
Option 1: Do Nothing and Wait.
A tax lien is generally not enforceable after 10 years but for 10 years the IRS or the State can take action by foreclosure of property (banks, houses, etc). In addition, tax liens remain on your credit report for a very long time and you don’t want to damage your credit. Option 1 is not recommended.
Option 2: Pay Lien Off
After 30 days, the lien will be released/removed. Easier said than done. Many people cannot pay that amount without experiencing a final struggle. If you can’t, you should work with professionals (tax attorneys and CPAs) as most individuals face this problem. YOU CANNOT sell your home or personal property until you deal with a Tax lien.
Option 3: Set Up a Payment Plan With the State or IRS
Working with a specialist makes it easy and if you set up a payment plan or offer in compromise, things can get under control. Many Tax Debt Reduction companies only charge you if they save thousands of dollars, so this is a win, a win for you.