As we noted last week, a federal tax lien has potentially catastrophic consequences, with the Internal Revenue Service (IRS) placing notice on all or almost all of your assets. There are some steps that can be taken to prevent the worst-case scenario from playing out. Paying the tax is the easiest and fastest means of obtaining a release of a tax lien. However, we understand that many individuals and businesses that receive a notice of tax lien may not have the cash ready to pay the amount, or may dispute some parts of the IRS's calculation of the tax owed. Given the seriousness of this situation, representation by an experienced tax attorney is important.
An attorney can help to determine if there were procedural defects in the lien filing. The IRS may have issued it prematurely, issued on exempt property or they may have failed to provide proper notice.
The IRS can release the lien if you agree to enter in to an installment agreement to repay the tax debt or an Offer in Compromise to pay as much of the debt as you can. If you are already in litigation over the disputed tax with the Office of Appeals or Tax Court, you should be able to have the lien released, with some exceptions, during that litigation. Also, your claim may be eligible for Innocent Spouse relief, but that can be a very complex determination.
Many of the elements of tax liens, seizure of assets and obtaining relief are subject to critical and strictly enforced time deadlines. If you miss some of these deadlines, you may lose any chance of disputing a tax debt or reversing a tax lien or seizure.
Unless you are a tax lawyer or extremely experienced in dealing with the IRS and familiar with their practices and procedures, you should seek assistance in dealing with these matters.