The IRS possesses wide powers as far as tax collection is concerned. When a taxpayer defaults on the tax redemption, filing for a lien is the first activity they carry out to recover the dues in the form of IRS tax debt. As per the law, a lien attaches to all the properties and possession owned by the taxpayer, once a federal tax notice is "served". This indicates that the IRS gets a legal right over the assets and bank accounts owned by the taxpayer to recover IRS debt. To make the lien more effective, it's required to be filed in the "public records" system, which is usually the local county office where individuals file their tax returns. The IRS initiates this legal instrument if it feels the individual is neglecting the payment of outstanding tax dues.



IRS tax lien implications

The filing of a lien can have an adverse implication for the taxpayer. Once the lien is served, it imposes an encumbrance on the assets owned by the tax debtor. Due to the imposition, the credit rating of the individual decreases considerably. Normally, credits limits are issued against the security offered by the assets owned by the debtor. The filing of the tax lien by the IRS has a strong effect of advertising to the world that a particular person is a tax defaulter, and a "wrong one". No creditor likes to provide credit facilities to a person bogged down with "bad reputation", since liens are associated with Hugh recoverable liabilities which proceed credit recovery by the lenders if the borrower exhibits delinquency. Getting fresh loans becomes almost impossible for such a person.

Tax lien solution

So the basic question is if a tax lien is in fact imposed, what's the solution? The recommended thing to do is to clear the tax debt as soon as possible, and eradicate the imposed lien. This can only be done by redeeming the IRS taxes. The IRS is obliged to "release" the lien and make it "ineffective" within thirty working days after the tax dues are paid in full and all outstanding penalty is redeemed.

Wage garnishment

If the debtor cannot pay the entire due amount in one lump sum, the taxpayer holds the right to make a request for making the payments in installments. Once a monthly installment schedule is drafted, it becomes possible to request an immediate release of the lien by redeeming the IRS debt. However, the IRS may entertain this request if they "feel" it's OK to remove the protection, and the tax debtor is certain to redeem the taxes. However, there's one more option available in case the IRS decides not to release the lien. It's possible to undergo wage garnishment and pay the outstanding tax through payroll deduction from wages, or electronic clearance from debtor's bank account. When consent is given for such automatic deduction, the IRS starts recovering the taxes from the monthly pay.

Third party guarantee

Another option is to provide a certain guarantee offered by a third party, in which case the guarantor "promises" to redeem the taxes in the event the tax debtor fails to make the payments. This option can also be in the form of a "bank guarantee". The IRS generally releases the lien if they are convinced about the regularity in the monthly payments leading to a total pay off over time by the IRS tax help provided by the guarantor.

IRS tax relief

Professional lending companies offer special credit facilities to redeem the outstanding IRS dues by offering IRS help. These facilities are generally offered through IRS tax relief or IRS tax settlement programs. As per the process, an expert in taxation working for the company represents the tax defaulter, and negotiates on his or her behalf to work out an arrangement and seek waiver to reduce some of the outstanding IRS dues. The remaining tax amount is paid off on behalf of the individual to the IRS, and subsequently the debtor pays reduced monthly installments to the credit company to redeem the dues owed to that particular company. In such cases the IRS receives its money so the lien gets released automatically.