New Rules for Federal Tax Liens

The IRS has relaxed some rules for federal tax liens. Under the Fresh Start initiative, the IRS has introduced the following changes:
  1. The IRS has increased the filing threshold from $5,000 to $10,000 in tax debt.
  2. The IRS may now issue a withdrawal of a filed Notice of Federal Tax Lien after has been released.
  3. The IRS may withdraw a Notice of Federal Tax Lien after a taxpayer enters into Direct Debit Installment Agreement.
With these relaxations, the damage a tax lien causes on the ability to take credit will be reduced, as the IRS may withdraw the lien notice after releasing a lien. It must be noted that the IRS retains the power to file a tax lien even on tax debt amounts less than $10,000.

Under a Direct Debit Installment Agreement taxpayers may use Form 12277, Application for Withdrawal, to request withdrawal of a tax lien after it has been placed. Taxpayers under a regular Installment Agreement can convert it to a Direct Debit Installment Agreement using the Online Payment Agreement.

As always, the quickest method to get a tax lien removed is to pay the entire amount of tax debt. After the payment, the IRS releases a lien within 30 days.

A federal tax lien can be attached to property, vehicles, securities etc. and to future assets acquired during the lien of an individual taxpayer. A federal tax lien can be placed on business property, and accounts receivable of a business.

Taxpayers must try to avoid a lien because of the difficulty of getting it removed. Getting placed into a tax debt payment plan to resolve tax debt or simply paying the tax debt in full can help avoid a lien.

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