Tax Lien

There are a number of moving parts when it comes to the IRS filing a tax lien against you.

It can be intimidating to try and understand the ins and outs of what they are and how you or your business may be able to get out of them. If you’ve just recently discovered you’ve had one placed on you, you’re worried that there’s one waiting in your near future, or you’ve been dying to find your way out of one for a while now, here’s a quick and easy guide to help you understand and alleviate yourself of tax liens.


A tax lien is the government’s legal claim against the assets of an individual or business that has failed to pay their taxes

Yes, finding yourself behind on your taxes can be a scary situation, but there are methods and resources to help you out

What is a Tax Lien?

A tax lien is the government’s legal claim against the assets of an individual or business that has failed to pay their taxes. When a delinquent taxpayer fails to repay their debt, the IRS may place a lien on their property, vehicles, securities, businesses, and bank accounts in order to guarantee payment.

A tax lien takes precedence over all other forms of debt an individual or business may have. After a lien has been placed, if the delinquent taxpayer does not make any attempt at repayment, the government may seize the assets.

How a Tax Lien Can Affect You

There are a number of outcomes from avoiding your back taxes and none of them are pleasant. These can include but are not limited to:

  • Fines

    After multiple notices of money owed, the first action the IRS will take against a delinquent taxpayer is a penalty ranging from $100 to $435, which can be a lot of money to someone who’s already in considerable debt. This penalty also collects interest.

  • Criminal Charges

    You may be prosecuted for tax evasion and sentenced to up to 5 years in prison and/or fined up to $250,000 for individuals and $500,000 for businesses.

  • Tax Liens

    The government may place liens on your assets in order to ensure you settle your debts or risk seizure of your property, vehicles, securities, and bank accounts.

  • Garnished Wages

    You may have a portion of your paychecks seized in order to settle your debts.

How Can I Avoid Back Tax Trouble?

Now that you’ve seen how grave the situation can get when you avoid paying your taxes, let’s look at ways to stay on the up and up with what you owe and how to reduce the damage.

If you’re unsure whether or not you owe money to the IRS, it’s in your best interest to figure that out as soon as possible. You can call them at 1-800-829-1040 and speak to a representative who can help you figure out your tax situation.

If you do know that you owe money to the IRS, it may be wise to consult with a professional. Of course, that costs money, too, so you can always use these next few free tips to get yourself on the path towards a debt-free life.

Always File Your Returns

It should go without saying that filing your tax returns is of the utmost importance. Nobody wants to have the IRS knocking down their door. Stay organized and be timely with your filing even if you know you’re not going to be able to pay what you owe right away. The penalties you will incur will only serve to make things worse.

Pay as Much as You Can Right Away

You may not be able to pay the full amount, but paying whatever you can right away could be your best option. Provided you’re not using a credit card and sinking yourself into further debt with even worse interest rates, you can avoid paying a significant amount of interest by biting the bullet and paying what you can, as soon as you can.

Consider an Installment Agreement

The IRS will work with you to come up with an IRS payment plan and keep you from suffering any consequences. You agree to a monthly payment over a set number of months in which you think you’ll be able to pay off the debt.

There’s also something called a Partial Payment Agreement which works much like an Installment Agreement except you’ll be allowed to settle on a reduced amount.

Declare “Currently Not Collectible”

This can buy you some extra time in order to get together the money you owe to the IRS. Of course, this is not a plan in and of itself, it only serves to give you the space to figure out a viable plan. In order to qualify, you must be able to prove that your financial situation is such that you would not be able to afford basic necessities were you to begin paying. Once you are declared “not currently collectible” then the IRS will no longer garnish your wages and all levies will be lifted until the grace period has ended.

Offer in Compromise

An offer in compromise may be a long shot, as less than half of all requests per year are granted, but it’s still worth consideration if you’re looking to avoid a lien on your house, seizure of your car, or jail time.

This program allows for debt to be relieved at a reduced dollar amount through either a monthly payment plan or in a one-time lump sum. This has worked for some and they’ve saved thousands of dollars for it, but the odds of coming to such a settlement are relatively low, so it’s not among the most viable options.

Don’t Panic!

Yes, finding yourself behind on your taxes can be a scary situation, but there are methods and resources to help you out. Stay informed and stay on top of your tax returns, and if you need more advice, then consider reaching out to a professional.

Frequently Asked Questions

  • How Much Do I Have to Owe the IRS to Face Jail Time?

    Generally, the IRS will pursue imprisonment only for tax evasion. Tax evasion, unlike most tax penalties, is a criminal violation in which the taxpayer takes concrete actions to evade payment of taxes at either the federal or state level.

  • Can a Tax Lien Hurt Your Credit Score?

    Since the introduction of the IRS Fresh Start program in 2017, the IRS only files a Notice of Federal Tax Lien for tax payers with debts over $10,000. This is a significant change from the initial $5,000 threshold.

  • Am I Financially Over My Ex?

    There are a lot of issues you need to iron out when remarrying after an ex-spouse. With children, assets, finances, and the rest in the picture, you have a longer and probably complicated history and, as such, need to make important decisions regarding the same.