The IRS will place a lien on your property to secure payment of your tax debt. A Notice of Federal Tax Lien may be legally issued by the IRS only after the following 3 requirements are met:
- The IRS makes an assessment against the taxpayer;
- The IRS sends the taxpayer a written Notice and Demand for Payment; and
- The taxpayer fails to pay the amount demanded within 10 days after receipt of the Notice and Demand for Payment.
A federal tax lien is then issued by the IRS in the amount of the taxpayer’s outstanding tax debt.
The lien puts the taxpayer’s current and future creditors on notice that the IRS has a claim against all of the taxpayer’s property, including property acquired after the lien was filed.
The lien attaches to all of the taxpayer’s property, both tangible and intangible.
Generally, there are 4 ways to avoid or remove an IRS tax lien:
- The taxpayer pays the debt in full;
- The IRS accepts a bond;
- The IRS accepts an Offer in Compromise; and
- The 10 year statute of limitations on collections expires.
You can also challenge an existing IRS tax lien or a proposed lien using either the CAP or CDP appeals process.