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How To Go About Resolving Tax Lien

The IRS typically attaches Federal liens on tax and loans. These liens are usually placed on personal assets and properties as collateral. This action is commonly used in secured loans to ensure taxpayers or borrowers fulfil their obligation by paying the full amount.

Tax liens often put your assets at risk as you stand the possibility of losing them to lenders if you are unable to pay your debt. During this reimbursement period, you will not have full control of your assets and properties. When paying your debt becomes difficult, you may want to reconsider the liens attached to your payment plan. Removing these liens is possible but requires a process.

In this article, you will discover ways to effectively resolve federal tax liens affecting your assets.

What Is A Tax Lien?

A tax lien is a legal document that gives the government or lenders a claim to an asset or property should you fail to meet the laid down obligation. The lien protects your lender claim from your house, property, car or any other agreed collateral.

Liens on loan deals make it very difficult to sell assets. If you choose to sell any of the properties included in the lien, the government or your lender will receive proceeds from the sale.

A tax lien is commonly used by the government on taxes to ensure they receive due revenue on tax payments. Liens serve as a substitute for a taxpayer's inability or refusal to pay taxes. Most lenders also embrace this loan type to ensure the borrower meets the stipulated payment deadline.

For example, if you take out a secured car loan, your lender may demand a lien attached to the loan payment. The lien used in this case could be the newly acquired vehicle or another property. This means that your lender gets the full legal right to claim your vehicle if you fail to meet the payment deadline after 30 days.

This deal usually goes into a record that notifies both the lender and the public about an unpaid debt. If you fail to pay your debt or tax, you will get a written document containing details of the lien to legally claim your property.

Lenders are usually wary of giving loans without repayment assurance. A lien serves as the perfect guarantee for lenders as they get to receive payment for the debt you owe either way. Lenders also get the opportunity to evaluate the property proposed as a lien before approving a loan.

This is why you must be aware of the details of a loan before applying. This will give you a clearer view of the requirements

Liens Vs Levies

People often mistake the meaning of these words for each other. Lien and Levy both apply in a financial setting but have different meanings. A tax lien is a written document that secures the government's claim to a property if a taxpayer or borrower fails to fulfil his financial obligation. On the other hand, a levy refers to an imposed move by the government to forcefully collect tax from evasive taxpayers.

A lien often validates the approval of a loan but with a clause that protects a lender's ability to get paid for a debt owed. However, levies do not provide this option but often feel like a compulsive action carried out by the government.

One common factor that separates these two legal terms is the method of application. While a lien allows both borrowers and lenders to agree on the lien attached, a levy gives no room for negotiation. The IRS imposes a levy as a means of ensuring you inevitably pay your taxes.

Levies imposed by the IRS could include:

  • * Confiscation of money directly from bank accounts

  • * Sanctions

  • * Frozen bank accounts

  • * Forced deduction from salary income(common in federal workplaces)

How Do Tax Liens Affect Your Credit?

Sometimes borrowers hastily agree to liens without understanding the significant impact on their finances. You stand a risk of losing your assets if you are struggling with paying your loan.

For lenders, liens are a great backup option that allows them to receive repayment on loans. Generally, lenders have to welcome the risk of approving loans to borrowers with good credit scores, credit history and other financial promising factors. These factors determine the trustworthiness of the borrower and the ability to repay a loan.

But with a lien added to a loan, the risk becomes beneficial for lenders who stand almost nothing to lose.

People often wonder about the effect of a tax lien on their credit. Well, having a tax lien against you does not prevent you from servicing a loan. All three major credit Bureaus stopped collecting information about liens. This means any information regarding tax liens will not appear on your credit report or affect your credit score.

Despite the lack of information on tax liens on your Credit report, the IRS still makes liens and tax debts available to the public. This makes it possible for other people like lenders and possible employers to have information about your repayment issues.

How To Remove A Tax Lien

A tax lien may be difficult to manage without a sufficient stream of income that allows you to pay your debts. Let's look at the options available to help you resolve your tax lien issues.

Pay Your Taxes/Debts On Time

The best way to avoid a lien is by paying your tax when due. Sometimes certain situations and expenses make it difficult to meet payment deadlines. There are different types of loans around. It is advisable to go for the one with a favourable payment method. While some loans may offer higher interest rates, others include other incentives and requirements.

On the other hand, once you pay your tax debt, the IRS will release your lien within 30 days. Paying your taxes will save you any hassling from the IRS and get any tax lien or levy off your back. If the government is demanding a certain percentage in tax payment, it would be best for you to make payments on time before the IRS gets involved.

Seek Professional Assistance

Every citizen must pay taxes based on their financial income. However, tax debts could lead to issues with the IRS. You run the risk of losing your property due to the tax liens included.

If you find yourself struggling with removing your tax lien, then you may require the help of a professional to handle your IRS issues. In most cases, the IRS are willing to negotiate the removal of the tax lien attached to your taxes or loans.

The process of resolving this deal is often long and may be tiring. However, by hiring competent and efficient professionals, you should be able to reach a favourable agreement with the IRS.


Filing for insolvency should be the last resort in any poor financial situation. But if you are stuck with your helpful option, you may have to take this option.

A file for bankruptcy declares you free of your tax debt but at the expense of some rules and requirements. This process usually takes time and will require legal guidance along with help from financial professionals.


Tax liens are almost inevitable as long as you're a taxpayer. Removing a tax lien takes a certain process that may demand the help of professionals. Once you have a tax lien withdrawn, you will have no worries about losing your property to the government.



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