Federal Tax Liens

A state or federal tax lien is often the first action in the collections process for any government agency.  One a tax lien has been filed; it won’t be long before more aggressive collections begin.   This can include wage garnishments, bank account levies, or visits by a revenue officer to your business location.  For this reason, you should take a Notice of Federal Tax Lien seriously.

What Are Federal Tax Liens?

According to the IRS, "a federal tax lien is the government's legal claim against your property when you neglect or fail to pay a tax debt." Tax liens make property owners unable to sell their property until the lien is satisfied; that is, paying the amount in full. It is important to note that tax liens are only placed after you neglect to pay an outstanding tax bill.

How Do Federal Tax Liens Affect Me?

When you have a Federal Tax Lien on file, your debt becomes a matter of public record.  It can hinder your ability to sell or borrow against your assets, such as your home.  It can also have a negative impact on your credit score and your ability to obtain financing.  It can even cause problems when trying to open a new bank account.

How Can I Get Rid of IRS Liens?

The best way to avoid a tax lien is to pay your taxes in full. However, if this is not an option, then you should consider collections alternatives such as setting up an Installment Agreement or pursuing an Offer in Compromise. The professionals at Bottom Line Tax Solutions can advise you on what options you have to settle your account with the IRS.  

There may also be options available to you that will allow you to sell, refinance, or use your property as collateral against a loan when it won’t fully pay your tax debt.

Discharge of Tax Lien

 A tax lien covers all the property that you own.  However, in some cases, the IRS will “discharge” a lien from a specific asset. This gives the taxpayer the ability to sell a certain piece of property even though it may not fully pay off the tax debt while the lien stays in place for all other assets.  A discharge can be granted in cases when you pay the IRS an amount equal to their interest in the property or you have other property that is worth more than two times your tax debt.


Subordination does not remove the lien, but it does allow creditors or investors to get "ahead" of the IRS, making it easier for a taxpayer to take out a loan to pay their tax debt.  For example, if you have a tax lien on your home, a mortgage lender would be hesitant to give you a second mortgage since their interest would be behind that of the IRS.  However, if you can show the IRS that by subordinating the lien you will be in a better position to pay your tax debt, they will consider this option.


This option removes the Notice of Federal Tax Lien from public record.  This can make it easier to obtain a loan or sell your property.  Taxpayers who are utilizing a direct debit installment agreement to pay their tax debt can request a lien withdrawal if they are in compliance and have made 3 timely consecutive payments.  This applies to taxpayers with balances less than $25,000.

Choose Bottom Line Tax Solutions

Do not try to go it alone, let the qualified staff of Bottom Line Tax Solutions guide you through the tax resolution process so that you can once again sleep nights.

We specialize in tax planning and tax resolution services for small business owners and individuals just like you! We have the experience and professional knowledge to resolve your problem with a federal tax lien. Give us a call or fill out our online contact form to schedule your personalized consultation today!

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