What do you need to do to Get a Payoff for your Federal Tax Lien?


Have you recently been notified of a federal tax lien by the IRS? Or, if you haven’t received such a notification yet, have you been worried about it? If so, you’re not alone—the fear of incurring back taxes and then facing the wrath of the IRS can be overwhelming. But with proper planning, getting your federal tax lien settled can be much easier than you think. Follow these steps to get your payoff and get rid of your federal tax lien in no time!

Know about Federal Tax Lien

A federal tax lien is the government’s way of ensuring that taxpayers who owe taxes will pay them. The IRS places a tax lien on an individual’s property if they have not paid their taxes in full, or if they do not pay as agreed under an installment plan. A federal tax lien attaches to all real estate and personal property belonging to that taxpayer. When the IRS levies on someone’s property, it can seize it and sell it in order to satisfy any outstanding taxes owed. A federal tax lien can be released when the taxpayer pays off the debt with interest, penalties, and court costs.

The Internal Revenue Service (IRS) has six years from your original tax due date to collect taxes through various measures, including IRS tax liens. Liens are considered legal obligations that require property owners to pay back taxes before selling or otherwise transferring their real estate.

How does a Tax Lien impact you?

If you are assessed a federal tax lien, this means that the IRS has filed paperwork with your county’s land records office and put a notice on public record stating that they have an interest in your property. So if you owe back taxes and the IRS files the lien, then they may be able to take your assets.

Assets:- The IRS can seize your property to satisfy any unpaid federal taxes that you owe. The best way to avoid this outcome is simply by paying off the debt owed before it goes too far.

Credit:- As long as you are current on payments, credit bureaus will report that your account is current, which will show up as a positive account status.

Business:- Not only does a federal tax lien impact your personal finances, but it can also negatively affect your business because some people might want to steer clear of working with someone who owes the government money. It could also hinder future financing options

Bankruptcy:- When you go through bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien will not be discharged.

What Can the IRS Do?

The IRS has the power to seize property or garnish wages of any taxpayer who owes them money. They can take payments from bank accounts, credit cards, and income tax refunds. This work is done by an IRS tax agent.

An IRS agent is an individual who works for the Internal Revenue Service. They are responsible for auditing taxpayers and bringing them into compliance with the law when necessary.

Tax lien releases can only be obtained when the IRS is fully satisfied or a settlement has been reached.

The lien would show up on the taxpayer’s credit report, damaging their credit score and preventing them from selling or refinancing assets secured by liens.

IRS Tax Relief

If you have a federal tax lien, you need IRS Tax Relief. There are many reasons why people might have unpaid taxes, such as:

  • They can’t pay their taxes because they lost their job.
  • Their income is too low.
  • They don’t earn enough money to file a tax return at all.
  • They were unaware of the requirement and failed to file a return on time or requested an extension.

IRS Tax Debt Settlement

Work with a tax professional

It’s important that you speak with a licensed tax lawyer or CPA who specializes in tax law. This is because an expert will be able to give you advice on whether the IRS settlement is worth the time and money. For example, if the IRS has filed a lien against your property, then you may want to take this into consideration before settling the debt. 

Offer in Compromise

An offering in compromise is when the IRS will allow you to pay a reduced amount of back taxes that you owe. A reduced amount can be paid in a lump sum or in short-term installments if you can prove to the IRS that you are unable to pay what you owe.

If you have an open case of bankruptcy, you can’t apply for a compromise. If you were approved for a settlement agreement, you have two years to settle your tax liability.

Statute of Limitations

There’s a 10-year window after assessment, typically near the filing date, that the IRS can collect unpaid taxes, interest, and penalties. Tax lawyers sometimes try to invoke the statute of limitations in an attempt to resolve a tax dispute. Even if the IRS tries to collect a tax debt, a taxpayer may try to hold off a tax levy, lien, or seizure to keep the statute of limitations alive.

Pay your tax bill

If you don’t challenge the correctness of your tax delinquency, the simplest course of action would be to just pay it. Your late tax bill will be saddled with added fees and interest after its original due date.

In order for paying your balance off after a lien to be reasonable, you may need to settle a payment plan in addition to paying the full amount.

File for bankruptcy

Even if your debt is small and there are steps you can take to improve it, filing for bankruptcy is always a severe and severe measure that should be used sparingly and with caution. While bankruptcy can sometimes clear up any existing debts, it may not solve the problem of IRS tax debt.


Now that you know what you need to do in order to get a payoff for your federal tax lien, it’s time to put the steps into action. The Internal Revenue Service (IRS) has plenty of tools that can help you get the money you need. But it’s up to you to take advantage of them.


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