IRS Tax Lien and its effects

Owing taxes to the IRS is a tough thing. It is a powerful federal body that employs severe means to ensure that you pay your taxes. One of these severe means is the IRS tax lien that the IRS imposes upon a piece of property to secure the payment of taxes. IRS tax lien is either imposed as a result of inadequate payment of taxes owed on real property or personal property or due to failure to pay income taxes or other taxes. Basically, the IRS tax lien enables the government to stop taxpayers from selling or transferring their assets until and unless they pay their taxes.
How IRS tax lien works?

The county sells IRS tax lien in the form of certificates at public lien auction sales. The IRS tax lien is placed on the property when an investor wins the bid on the IRS tax debt lien certificate at the auction. On placing the IRS tax lien, the investor is issued a certificate that summarizes the tax debt, interest and penalties on the property and investor becomes the legal holder of the IRS tax lien certificate.

However, the investor does not acquire the title of the legal holder of the property right after the issuance of the IRS tax lien certificate. In fact, as soon as the certificate is issued, the present property holder gets a “redemption period” to repay his tax debts. The redemption period usually varies from one jurisdiction to another.
If the property holder fails to repay the taxes within this period, the investor obtains the title of the legal property holder. Almost all the states and counties take about 2 years to transfer the property title to the investor. But, if the property holder successfully pays off the tax debts within the redemption period then the investor is required to return the IRS tax lien certificate to the county and the investor is reimbursed for all the costs associated with the IRS tax lien certificate.

Interests are crucial to IRS tax lien certificates. The investors thoroughly need to know about it if they intend to buy IRS tax lien certificates. The interests on IRS tax lien certificates typically vary from 8% to 50% depending upon which jurisdiction they are purchasing from.

Issues revolving around IRS tax lien are complex legal issues. Most IRS tax liens emanate from unpaid property taxes and income taxes. Unpaid taxes on a property moves on from one owner to another. So, while purchasing a home you should make sure that you know every little detail about its tax situation; otherwise, you might land up owing unpaid taxes for years without your knowledge. And that might result in an IRS tax lien being placed on your cherished home much to your dismay.
Real estate properties are most common assets on which IRS tax lien can be placed. However, there are also several other kinds of properties, such as cars, bank accounts or any asset, on which IRS tax lien can be successfully placed too.

What is worth noting here is that an IRS tax lien can be extremely harmful for your credit rating? An IRS tax lien will not only hamper your ability to get loans in future but also make it difficult for you to recover from the IRS tax lien.

If an IRS tax lien is placed on your property, then you should get the IRS tax lien removed from your property at the earliest. And that will be in your own interest. By getting the IRS tax lien released fast, you will benefit yourself the most, because it will give your prospective lenders a positive impression about you. It will not only focus that your taxes were unpaid by mistake but also reinforce the fact that you are a responsible debtor.
The best possible way to do away with IRS tax lien is to pay it in full; or you can issue a bond that guarantees the payment of the owed taxes to get the IRS tax lien released.

As stated earlier, IRS tax lien is a complex issue. So, if your IRS tax lien issues seem quite complicated, then you should consult an experienced tax expert right away to get some effective tax debt relief.

1. You were not informed about the owed taxes, or


2. The statue of limitations of your tax debts had expired, or


3. The IRS tax lien was imposed while you were going through bankruptcy procedure.