Effective Strategies to Remove an IRS Tax Lien for Taxpayers
- Timalyn S. Bowens
- Jul 10
- 7 min read
"I want to do everything I can to avoid a tax lien! What exactly does a tax lien do?
That is what I hear often from taxpayers when they first come to me. You may hear the same things as well. That's why I am sharing with you what I've learned, to equip you to understand the options available to help the taxpayer when they have a tax lien. First, let's take a look at what an IRS Tax Lien is. Then we'll look at the IRS process of issuing a tax lien and some important things to note.
Once you've grasped that, we'll be able to explore the different options the IRS has available. Each of these options will help you eliminate the IRS tax lien from your client's situation. This way, they can live their life without the IRS restricting their purchases and sales with a tax lien.
What is an IRS Tax Lien?
An IRS tax lien is the IRS's legal claim to a taxpayer's property. Essentially, it is the IRS calling dibs on the taxpayer's property and the proceeds of a sale. A common example of a lien is when a taxpayer purchases a vehicle using financing. The title of a vehicle shows the name of the creditor. This lets anyone purchasing or selling the vehicle know that the creditor has a right to the car until the owner pays the debt. The same thing happens when a person purchases a home. The title lists the creditor as the lien holder.
Contrary to popular belief, IRS tax liens are not only applicable to taxpayers who own a home. Property in this sense includes real property, securities, and vehicles. The lien is not limited to the property that the taxpayer owns when the IRS issues the lien. It also includes property the taxpayer acquires after the IRS issues the lien.
A tax lien is one method of enforcement that the IRS uses to collect the funds owed to it. A federal tax lien is automatic when the taxpayer does not pay their CP14, Notice of Tax Due and Demand for Payment. This is what allows them to then issue a tax levy.
However, the IRS may also file a notice of federal tax lien with the county clerk's office. This is public record, and what makes creditors aware of the taxpayer's IRS debt.
Notice of Federal Tax Lien
A Notice of Federal Tax Lien is not a direct ding against the taxpayer's credit. However, when the IRS issues the lien, it will make it difficult for the taxpayer to sell or borrow against their property. This is because when they make the attempt, the bank or title company will see the debt they owe to the IRS on the lien.
The lien will list the following:
Taxpayer's name
Taxpayer's address
Tax Type (income, payroll, etc)
Tax period(s)
Amount of debt connected to the tax lien
The date the IRS issued the lien
And because the information is public information, the taxpayer begins to get spam mail and calls from people offering to help. Using NFTLs as a method of marketing can be done when done correctly. But you don't have to be spammy when you do it. I cover how to do so in this article: Federal Tax Lien Marketing.
As an Enrolled Agent, you can help the taxpayer to have the tax lien released or withdrawn. A tax lien is self-releasing after 10 years, but the taxpayer may not have 10 years to put their financial goals on hold. That is why they need your expertise.
Here are the strategies available for you to help the taxpayer:
We'll briefly take a look at each of these after understanding the difference between a lien release and a lien withdrawal.
Tax Lien Release vs. Lien Withdrawal
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