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What Is a IRS Tax Lien on a Property?

March 15, 2011 | Comments: 0 | Views: 52

An IRS lien on property can come after non-payment to the federal government for outstanding tax debt. This lien can be attached to things like a car, home, land, or even a business. The term "property" can even refer to future income or collateral that you might acquire after the filing. It is usually the last step in the process when the IRS is attempting to receive money for your debts. You do have the option of giving up your property in exchange for the discharge of the debt, but it is recommended that you contact an IRS agent to work out a deal in a way that will be the most financially beneficial to you.

There are many negative consequences to having a lien filed on your property. These would include an impact on your credit score and ability to qualify for a loan. The filing will sow up on your credit report and will remain until the debt is paid off. The IRS claim to your property will trump all other claims, in essence giving them priority over other creditors. So, if you decide to file for chapter 7 bankruptcy and your assets are liquidated, the government will take their debt out of the proceeds before any other creditors are able to.

Tax liens to expire after a 10 year period of time and the ten year date begins at the time when you owe the debt, not at the time the lien in filed. There are also certain action that can extend the 10 year time frame like bankruptcy filings or a court action. After the 10 year period is up, the IRS can re-file to extend the lien. This must take place within 30 days or they will lose their ability to do so.

It is possible to appeal a Federal lien on property. If you feel that the lien was filed in error, or that your full debt was paid before the lien was placed, you can file for a hearing in court, or try and resolve the issue with an IRS case manager. There is also a program called "offer in compromise". This can be agreed to by the IRS if the debtor has no means to pay off the debts. If this is accepted, then the debtor may end up owing much less than the full amount. This is only likely to occur if the IRS sees the potential for collection as being very low.

Catherine Carmody is a blogger and freelancer that contributes to the website

Source: EzineArticles
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