What Is IRS Tax Lien | Valuable Information Expats Need To Know

What Is A Tax Lien?

The Internal Revenue Service on a regular basis files Federal Tax Liens against taxpayers who have unpaid tax obligations.

An IRS tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. Liens attach to the taxpayer’s property (both real property and personal property).

The lien protects the government’s interest in all your property, including real estate, personal property (such as vehicles, boats, etc.) and financial assets (such as your bank accounts). If property is sold while a lien is in effect, the IRS will be paid out of the sales proceeds before you are paid.

A federal tax lien exists after the IRS:

1. Has determined your tax liability and made an assessment;
2. Sends you a tax bill that explains how much you owe (Notice and Demand for Payment); and

You neglect or refuse to fully pay the debt in time.

The IRS files a public document, known as a Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.

The negative implications of a lien are that once the IRS files a Notice of Federal Lien it will be reported on your credit report and it will impede your ability to obtain credit.

Obviously, a lien can be avoided and resolved by filing and paying any taxes demanded by the IRS. But, this may not be the best route for tax problem resolution.

If the IRS has prepared an SFR return (substitute for return) because you have not filed your own return, chances are that you have been assessed a higher tax amount then what may be due if you prepare your own return by claiming all credits, deductions and benefits that you may be eligible for.

Finally, a lien shouldn’t be ignored. If ignored, a lien may expand into a levy. If you can’t file or pay on time, don’t ignore the letters or correspondence you get from the IRS. If you can’t pay the full amount you owe, there are options available to help you settle your tax debt over time.

What Is A Levy?

Some people are confused about the difference between a “tax lien” and “levy”. A tax lien is a document filed by the IRS to protect the government’s ability to collect money to pay a tax liability. A levy is the forced collection of tax, for example by confiscating money directly out of a bank account or actually taking ownership of your property (such as a home) in order to pay the tax liability. This is in effect a seizure of your property and obviously this can be a disastrous consequence of your tax problem.

Inaction and delay will only magnify your tax problems. We want to hear about your tax problem and provide you with the needed relief and resolution. We want to create a plan that resolves your tax problems while allowing you to get on with your life. Our professional approach and commitment will help get you on the right track.

If you have received a notice of tax lien or levy, don’t delay in taking action. Contact us right away to protect your interests.

Our goal at Tax Samaritan is to provide the best counsel, advocacy and personal service for our clients. We are not only tax preparation and representation experts, but strive to become valued business partners. Tax Samaritan is committed to understanding our client’s unique needs; every tax situation is different and requires a personal approach in providing realistic and effective solutions.

Click the button below to request a Tax Resolution Services Quote today to get started with the resolution of your tax lien or levy.

Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US tax preparation and representation. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.

When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts). If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).

Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.

Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.