When you fail to pay a tax debt, the government will place a federal lien against you, also known as a claim against your assets. When the IRS assesses your liability, they will first send a notice demanding your payment. If they do not receive a response within 10 days they can then file a federal lien. This lien can be against your property and be attached to your assets, including your home, car and even your business.
At J&B House Solutions, we will help you understand how the lien process works, which kind of property it can attach to, the consequences of a federal lien, how long the lien will last, and what priority it takes over the interests of other property. There are also some circumstances in which the IRS will remove or subordinate the lien.
When a lien is filed against you, your creditors are notified, meaning it can prevent you from selling or borrowing against your property until the tax debt has been paid. Having a federal lien filed against you can severely impact your credit score by upward to about 100 points. Tax liens can also impact your chances of being approved for a new credit loan, and can increase your interest rates and premiums on insurance policies. Many public records will eventually be dropped off of your credit record. Unfortunately, federal tax liens will remain on your report indefinitely.
Before the IRS can file a tax lien, they are legally obligated to inform you of how much debt you owe, and they must request payment from you. Once the lien has been filed, however, they are not required to inform you. You have 10 days to respond to their initial payment request, which is why it is very important to always respond promptly to any kind of notice from the IRS, even if you cannot pay the debt right away. There are options for payment plans in this circumstance.
The best way to approach and get rid of a tax lien is to pay your tax debt in full. Once the lien is paid, it will stay on your report for 7 years from the date it was paid. Therefore, paying your debt as soon as possible minimizes any further impact on your credit score.
It is very important to understand tax liens and how you can deal with them. Visit http://jandbhousesolutions.com/ for more information.