IRS Tax Lien and Your Credit - You Can Work the System

 
Your credit score will plummet! When the IRS puts a federal tax lien on your credit your borrowing ability is completely shot. You have no chance of getting a loan or getting any kind of financing until you pay off your IRS debt. Unlike other IRS collection actions like levies, where the IRS seizes money from you bank or paycheck, a lien is very difficult to get removed. The IRS's main goal with a tax lien is, according to the IRS, "to promote payment compliance."

Work the system...However, even though the IRS seems all powerful, and I will attest to the vast power it can wield; there are limitations to what it can do.

The IRS is a bureaucracy, and like every bureaucracy there are procedures that must be followed. Before you can be hit with a tax lien the IRS must complete a few things:

1. An income and lifestyle assessment must be done. If you're already destitute or your credit is already destroyed there isn't any use in the IRS imposing a tax lien.

2. The IRS has to have already made a demand for payment from you. The IRS has to make an effort to reach an agreement with you before they can start any kind of involuntary collection action or impose a lien.

3. This is where you come in...you must have neglected or refused to pay your IRS debt. Not working with the IRS is the number one reason people have tax liens or other collection actions taken against them.

The federal tax lien will remain in effect until the debt has been paid in full, or special circumstances require that the lien get removed.

There are exceptions to the rule...There are situations that can prevent a tax lien aside from just being destitute. The following list from the IRS will keep them from imposing a lien. It should be noted that the reason these situations prevent a tax lien is because there's nothing to put a lien against.

1. The debtor is a defunct corporation where the assets have been liquidated

2. The debtor is deceased and there are no known assets in the estate.

3. The debtor lives outside of the United States and doesn't have any assets in the States.

4. The debtor can prove that the tax lien on their credit would cause them to be unable to pay on their IRS debt.

5. The tax lien would prevent them from getting a loan to pay off their debt. This is only a temporary solution. You must turn in your loan documents proving that you are trying to settle your debt by a date set by your revenue agent.

Use the knowledge...Now that you know what goes into a federal tax lien, you should be better prepared to deal with the IRS when they send that letter threatening a tax lien. But as always, when dealing with the IRS, don't give them the chance to stick you with a tax lien. Always take the first step, and come up with a solution before the IRS dictates a solution.

Now you have the smoking gun...Use it! 
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Richard Close was an IRS-Hitman. He worked as a revenue officer for the IRS and his father was the head of the collections branch for 30 years; so it runs in the family. He left that behind and now he's partnered with Tax Defense Network to help thousands of Americans with their tax problems. He gives the tips and tricks for you to fight the IRS and win! Visit him at: http://irs-hitman.blogspot.com or http://www.taxdefensenetwork.com, or contact: email irs-hitman@taxdefensenetwork.com or 1-888-248-9058.

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