Tax Solutions

Lien Withdrawal, Subordination, and Releases

There are options available to get a more favorable financial outcome even if you have a tax lien in place.

Get help with federal tax liens.

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“If the IRS has placed a lien on your personal property or business assets, it can have a serious impact on your ability to sell, refinance, or use your assets to grow your business.”

- Alyssa Maloof Whatley

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If you already have a tax lien in place on your home or other property?

You may think that the only way to get out from under a federal tax lien is to pay your tax debt in full, but if that isn’t a feasible option, there are several remedies available to you.

Ironically, this restriction also makes it almost impossible to satisfy your tax debt. It might make you wonder why the IRS utilizes liens at all as a primary collection tool. Recently, the IRS has increased the threshold for lien placement to $10,000 and if you’re in good faith communication, the IRS is deprioritizing placement of liens.

IRS Tax Lien Withdrawal

As you can imagine, the IRS will only withdraw liens in certain circumstances.

These can include the following:

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Improper or premature liens

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The taxpayer has entered into an installment agreement to satisfy the liability for which the lien was imposed and the agreement does not provide for a federal tax lien

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Removal of the lien will facilitate collection of the tax such as the lien is impairing the taxpayer’s ability to earn a living to pay the liability, etc.

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It is in the best interest of the taxpayer and the government. The painful consequences of a federal tax lien are designed to force taxpayer compliance.

A lien withdrawal request, when granted, removes the public Notice of Intent to File a Federal Tax Lien. The withdrawal serves as assurance the IRS will not compete with your other creditors for an interest in your property.

Before you can pursue lien withdrawal, you need to be back in compliance with the IRS. This means that all your returns are filed and that you are current on your withholdings or estimated tax payments.

“Although a tax lien can limit your ability to sell or refinance, there are options to remove or subordinate liens so that you can move forward with a transaction.”

- Alyssa Maloof Whatley

The Law Firm of Alyssa Whatley team
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IRS Lien Release, Discharge, and Subordinations

If you failed to respond when you first received the IRS notice of intent to place a lien on your property, your option becomes seeking a full or partial lien release. Because a tax lien affects not only the assets you own today, but any personal or business assets you acquire during the period of the lien, release of your lien can become critical to protecting your financial future.

If you pay your debt in full, the IRS will automatically release previously filed tax liens 30 days from the payment posting.

It is possible to seek a lien discharge from specific assets?

A lien discharge means the IRS will remove the lien only to a specific piece of property.

For example, you have a home that you wish to sell, but in order to do so you have to ask the IRS to remove the lien from the home to give clear title to the buyer. Often times the IRS will remove the lien, so long as, the government receives the proceeds from the sale that they are entitled to or the remaining property subject to the lien is double the amount of the liability.

In this example, if the house is being sold for $400,000 and the first mortgage balance is $405,000, the IRS lien is secondary and there is not enough equity for the Notice of Federal Tax Lien to attach to and thus, no proceeds are owed to the government. In this case, you could submit an application with documentation to the IRS and they could issue a Certificate of Discharge as to that specific property to allow you to move forward with the sale.

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Is a lien release right for you?

You may be able to enter into an acceptable repayment plan with the IRS and make a successful argument that a lien release is in the best interest of the government by freeing up your options for repayment of your debt.

What is a lien subordination?

Another way to free up your options is to pursue lien subordination. By asking the IRS to allow other creditors to move ahead of the government’s interests, it may make it easier for you to secure a loan or refinance your mortgage provided that the government will receive the amount they are entitled to by subordinating the lien or it will help facilitate collection of the past due tax liability.

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“Whether you have recently received a Notice of Intent to File A Tax Lien or a lien is already attached to your property or business assets, it’s important to speak to a tax professional about all the available options for your financial circumstances.”

- Alyssa Maloof Whatley

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Do IRS tax liens ever go away?

Generally speaking, the IRS lien is good for a period of 10 years. Tax liens are enforceable until the liability is paid or becomes unenforceable by reason of lapse of time (i.e. passing of collection statute expiration date).

Notice of Federal Tax Liens must be re-filed after 10 years to retain priority as of the initial filing date. If the lien is not re-filed, it will self-release 30 days after the 10 years after the assessment, regardless of any extension or suspension of the collection statute of limitations.

The IRS has until 1 year pending the 30 days after the expiration of the ten years to refile the lien. It is very uncommon for the IRS to renew the federal tax liens.

Are there other options to negotiate your way out of a federal tax lien?

Depending on your financial circumstances, your tax compliance history, and other factors, you may be eligible for an Offer in Compromise which can allow you to settle your tax debt for less than you owe. It’s important to speak to a tax professional to understand all the options available.

What is lien withdraw