What Triggers an IRS Tax Lien and How Florida Residents Can Get It Removed
Discovering that the IRS has filed a tax lien against you is one of those moments that stops you in your tracks. Suddenly, your property, your finances, and your ability to borrow money are all at risk.
The good news is that a federal tax lien is not permanent, and Florida taxpayers have real options for resolving the situation. Our experienced Florida tax and IRS attorney explains how liens happen and what it takes to get one removed.
What Triggers a Federal Tax Lien in Florida
A federal tax lien does not just happen. Before the Internal Revenue Service (IRS) files one, it first assesses the tax you owe, sends you a bill, and gives you time to respond. Only when that balance goes unpaid does the IRS take the next step of filing a Notice of Federal Tax Lien, or NFTL, with your local recording office.
That filing provides notice that the government has a legal claim against everything you own, including real estate, vehicles, financial accounts, and any property you acquire while the lien remains in effect. Situations that commonly lead to a federal tax lien include:
- Ignoring IRS notices about an unpaid balance.
- Not making payment arrangements.
- Not filing tax returns for one or more years.
- Defaulting on an existing IRS payment agreement.
- Underreporting income.
The IRS files more than one million federal tax lien notices each year. Florida taxpayers often first learn of it when they try to sell their home, refinance a mortgage, or apply for credit.
How Florida Taxpayers Can Get an IRS Tax Lien Released or Withdrawn
A lien release happens when a tax debt is paid in full or otherwise satisfied. A withdrawal removes the public notice entirely, and is generally preferable. There are several options in terms of removal or relief, depending on your situation:
- Pay the full balance, triggering an automatic lien release within 30 days and making you eligible for a full withdrawal using IRS Form 12277.
- Enter a direct debit installment agreement for a balance of $25,000 or less, which may qualify you for a lien withdrawal after three consecutive on-time payments.
- Settle through an Offer in Compromise, resulting in a lien release upon acceptance and fulfillment of the terms.
- Request lien subordination, allowing another creditor to take priority, making it easier to refinance or sell.
You also have the right to appeal the lien filing within 30 days of the notice if you believe the IRS did not follow proper procedures or filed the lien in error.
Consult Our Experienced Florida Tax and IRS Attorney Today
A federal tax lien impacts every aspect of your life. For over 50 years, Ronald Cutler has provided the trusted legal guidance clients need to successfully resolve the situation.
A Certified Public Accountant and former FBI Special Agent on tax cases, he’s a strong ally to have on your side. If you’re facing a tax lien or are concerned one may be coming, contact our office and request a consultation today.
Sources:
irs.gov/businesses/small-businesses-self-employed/understanding-a-federal-tax-lien
taxpayeradvocate.irs.gov/wp-content/uploads/2020/09/arc09_vol2_liens.pdf
irs.gov/pub/irs-pdf/f12277.pdf
