The dreaded IRS tax lien. Once filed, it can wreak havoc on credit scores. It can call into question occupational licenses. Worse yet, it triggers a flood of mail and phone calls from tax resolution companies hawking their services.
About Liens and IRS Liens
A lien is a claim to property. Think of it as a post-it note that says “you we me” that attaches to the taxpayer’s property.
Creditors have to take certain steps under state law to obtain a lien. This typically involves obtaining a judgement from the court.
But there are exceptions, such as mechanics liens that contractors can file.
Federal law provides that a lien arises by operation of law once taxes are unpaid. The IRS can then file notice of the lien to help protect its rights to the taxpayer’s property.
The New IRS Lien Regulations
The Treasury Department issued new proposed regulations for certificates of discharge of IRS tax liens today. The regulations are required to comply with the IRS Restructuring and Reform Act of 1998.
Most significantly, this new proposed regulations add procedures for property owners who did not create the tax lien (i.e., persons who purchase property subject to IRS tax liens) to request that IRS tax liens be released. Essentially the regulations allow this non-tax debtor owner to make a tax deposit or post a bond and it allows the IRS and the federal district courts to determine what happens to the deposit or bond.
This new regulation makes it even more important for taxpayers who have or are considering the purchase of property subject to an IRS tax lien to contact an experienced tax attorney to help them navigate through the process.