Tax Lien Removal - A Tricky Situation

Try and not pay your income tax or property tax for delayed periods to the IRS and face repercussions from them in the form of tax liens. Tax lien removal under these circumstances will also be quite difficult for you as you will be already short of greenbacks.

What the IRS does in these tax recovery delay situations is to obtain a court decree for an irrevocable security interest in your own property till such time that you are not able to repay the tax owed to them in full.

A tax lien is enforceable as per law in the US for a period of ten years in the case of tax liens imposed by the IRS on or after 01st November 1990 and six years for those imposed by them before that.

You are then in trouble. Not only is there the danger of your credit rating immediately going down below the minimum required to obtain a loan from any agency to tide over the situation, you cannot even mortgage your personal property to a loan provider in an effort to get a loan from them. This is simply due to the IRS mortgage (tax lien) on your property.

So, since you are already cash strapped and you cannot obtain a loan anywhere else, how will you succeed in getting the tax lien imposed by the IRS removed from your property?

One method to remove tax lien is to try and wait out the requisite period of time (ten years for tax liens imposed by the IRS after 1st November 1990 and six years before that) and hope that the IRS will have forgotten all about your case.

The IRS may do one of two things.

One is that they may really forget about your case during the enforcement period of the tax lien and due to this they may forget to extend the tax lien within the set deadline.

In that case as per law, the tax lien earlier imposed on you will become automatically null and void. It will be as if you will get the tax lien release by default on the part of the IRS. You will then be free from the IRS mortgage on your property and will be able to sell it or otherwise dispose it off.

On the other hand, the IRS may not forget about your case and if your tax backlog is really huge, they may decide to extend the tax lien after all for a further period as per law, within the set deadline. In that case, it will be really curtains for you. All you can do in this situation is to try to sell off some other property which you may have and about which the IRS may not know about and pay off the tax backlog.

Generally, the IRS takes a compromise route to tax lien removal by giving you an Offer of Compromise You then pay lesser taxes to the exchequer than are owed.

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