IRS Tax Lien: Did the IRS Act Illegally? Learn to Escape an IRS Lien

Hit without Warning: Liens are often issued without warning, and there's a big problem with that. Why? Because it's illegal! If you didn't receive a notice in the mail before a Lien was issued on you, read on. See if you qualify for having the Lien removed.

Demanding Letters: Before the IRS can issue a Lien they are required to send a notice (“Notice and Demand for Payment”) and give you the opportunity to appeal before the Lien is issued. If they don't do this, the Lien is invalid. Believe it or not, the IRS often fails to send proper notices, or sends them to an incorrect address.

Know Your Rights: The law contains a useful tool for overriding Tax Liens. It's known as the “Lien Withdrawal”, and you might qualify for it. There are four possible reasons for withdrawing a Lien:

  1. The Lien was filed too early or was in violation of the IRS procedures.
  2. You entered into an Installment Agreement that does not specifically provide for a Lien.
  3. Withdrawal of the Lien will facilitate the collection of the tax.
  4. The Taxpayer Advocate determines that the withdrawal of the Lien would be in the best interest of both you and the IRS.

Fight Back! If any of the above applies to you, it's important that you act fast to save your credit. You will need to send a detailed letter to the IRS before they will remove the Lien. There is no preprinted form for you to fill out. IRS Publication 784, “Application for Subordination of Federal Tax Lien” lists all the information you will need to include in your letter. But read carefully! One mistake and your lien could be permanent.

Watch Your Back: Did the IRS agree to withdraw the Lien? It's not over yet. First, make sure the IRS gives you a copy of notice that a lien has been released. The IRS must also notify credit reporting agencies and creditors that the levy has been withdrawn. This helps repair the damage done by the Lien. But it's your duty to provide the names and addresses of those you want notified, so make sure you cover you bases.

Now You Have the Smoking Gun...Use it!