What If You Don't Pay Your Taxes?

​If you don't pay, the IRS files liens as claims against your real and personal property in order to secure the payment of taxes you owe. The filing of the Notice of Federal Tax Lien serves as a public notice to other creditors that the IRS has a claim against your property.

Not only do these liens appear on title to your real property, they also appear on your credit record and can affect your ability to borrow money.  Even after the tax liability is paid off and the IRS releases the lien, the lien release will stay on your credit record for up to seven years unless the IRS agrees to withdraw the lien.

​Thankfully, the IRS Fresh Start program makes it a bit easier for taxpayers to pay back taxes and avoid tax liens. The goal is to hopefully reduce the harmful impact of a lien on a taxpayer.  Key elements include; 

• If a taxpayer owes less than $25,000 and sets up an installment agreement that will pay off the liability within 60 months, the IRS will often agree not to file a lien.  If the taxpayer defaults on the installment agreement, the IRS will then file a lien. 

• After the IRS has released the lien, you can now request a withdrawal of the filed Notice of Federal Tax Lien.  Thus, the lien will no longer appear on your credit record.  

• In order to request the withdrawal, you must complete IRS Form 12277, Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien.  As the reason for withdrawal, you should check off, “The taxpayer or the Taxpayer Advocate acting on behalf of the taxpayer, believes withdrawal is in the best interest of the taxpayer and the government.”

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