Cause and Effect of IRS and Federal Tax Lien

If you owe taxes to the government and do not pay it in the specified time, a claim against your property would be stated by law. This type of government claim is called tax lien. The lien attaches automatically to everything you own including car and business. It also covers any interest and penalties you have on the tax debt.

When you owe the government an amount of due taxes, the IRS sends you a demand letter to pay it up. This is a form of written demand to pay the debt which is officially called Notice of Federal Tax Lien. If you do not pay within the thirty days time frame, the IRS is going to file a notice showing your tax debt in the public records. The IRS files so many of these liens across the United States to those delinquent taxpayers. For some states that do not have county recording systems, the IRS sends the notice over to the office of state secretary. The county or state fee for recording the lien is paid by the IRS which in turn is added to your tax bill.

Do you know the effects of having your Notice of Federal Tax Lien recorded? A Notice of Federal Tax Lien shows the general public that you owe tax debt to the IRS. It works like a recorded mortgage which shows anybody who searches for public records of tax debt. It also pulls out a credit report of you owing a lien against your property. Furthermore, a recorded lien causes damage on your ability to borrow money using credit. It also scares off potential lenders or creditors. This makes it hard for you to avail a home loan or finance any purchases. You also need to know that lien notices are noted by credit reporting agencies.

Now that you know the effects of tax liens, it is time to learn how to remove it. Always remember that a lien cannot be removed if you do not pay the due tax along with any interest and penalties, or paying it via an offer in compromise. Pay the full amount of taxes owed in order to get an IRS Certificate of tax lien release. Also, keep in mind that even if you have cleared your debt, the lien would still stay in your credit report for a few more years. So, it is best to pay your taxes regularly to avoid this financial disaster.
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About the Author

Dustin Hahn is the top tax liens and deed consultant today that conducts trainings and mentoring to investors who want to learn the secrets behind real estate tax sales investments. He is the owner of Tax Sales Secrets, the best tax liens and deed investment company. He is the author of Real Estates Best Kept Secret, an e-book which is available at http://www.taxsalessecrets.com