Kirk A. McCarville, P.C., lawyers in Phoenix, AZ, Arizona

Liens

Once the Internal Revenue Service has assessed a tax and has sent the taxpayer a bill in the form of a Notice and Demand for Payment, a lien arises in favor of the government on all real, personal, tangible, or intangible property of the delinquent taxpayer until the amount is paid. By filing notice of the lien, the IRS has publicly notified all creditors of the taxpayer that it has a claim against the taxpayer's property, including property acquired after the lien was filed. The notice establishes priority of the government's lien in circumstances such as bankruptcy proceedings or sales of real estate. A federal tax lien may harm a taxpayer's credit rating and impair his or her ability to get a loan, a credit card, or a mortgage.

The lien attaches to all of the taxpayer's property. Whether a taxpayer owns an interest in property that can be subjected to a federal tax lien is an issue governed by state rather than federal law. However, once it has been determined that the taxpayer has an interest in property under state law, federal law controls priorities among competing creditors and whether specific property is exempt from attachment.

Once the federal tax lien arises, it continues until the tax has been paid or until the lien becomes unenforceable due to a lapse of time. Time has lapsed if 10 years have passed from the date of assessment of the tax and the IRS has not attempted to collect the tax either through court action or distraint. The taxpayer is entitled to file an action against the government, but not against IRS employees, if the IRS knowingly or negligently fails to release a lien when it should be released.

After a taxpayer receives notice that a tax lien has been filed, he is entitled to have an IRS manager review the case. He may also request a Collection Due Process hearing with the Office of Appeals. If the taxpayer disagrees with the Appeal's determination, he may request judicial review of the determination.

The IRS must issue a Release of the Notice of Federal Lien within 30 days when either of the following conditions are met: the taxpayer has satisfied the liability, including interest and other additions, either by payment or by adjustment; or the IRS accepts a bond submitted by the taxpayer to guaranty payment of the debt.

A filed Notice of Tax Lien can be withdrawn by the IRS if:

The notice was entered too soon or contrary to IRS procedures.
The taxpayer entered into an installment agreement to pay the debt.
Withdrawal will speed collect the tax.
Withdrawal is in the best interests of both the taxpayer and the government.