How To Avoid Or Remove Tax Liens On Your Real Or Personal Property

A tax lien is when a taxing authority makes a legal claim to your personal or real property. The lien basically says that the taxing authority has the right to the proceeds from your asset to cover your tax liability. Taxing authorities issue liens to protect their interest in your tax debt.  

Liens can make it hard or impossible to sell or transfer your asset, and because they are public, they can also make it hard for you to obtain loans. If you're worried about a tax lien, here's what you need to do to protect yourself and your assets.  

1. Respond to notices promptly.

Tax liens are usually not a surprise. Whether you owe money to the IRS, your state taxing agency, or your county for property taxes, the taxing authority should send you multiple notices before issuing a lien. To reduce your chance of having the lien placed, make sure to respond to all notices promptly. 

2. Try to make arrangements on your tax bill. 

If you are ignoring your tax bill because you don't have money to pay it, you are not alone. Many people take this approach because they are intimated by the taxing agency. Don't be. In most cases, it's better to reach out to the taxing authority proactively than it is to wait for them to track you down. 

Most taxing authorities have a number of arrangements you can make on your tax bill. For instance, your property tax authority, the IRS, or your state may be willing to let you make payments. Ideally, you should make arrangements before the lien is in place. Often, if you set up a payment arrangement, the taxing entity won't issue a lien. 

3. Ask for a lien removal.

Don't assume the lien is permanent. Ask the taxing authority to remove it. The worst they can say is no. If you are willing to make payment arrangements on your tax debt, they may agree to remove the lien. In some cases, they may remove the lien if you can prove that it's causing you financial hardship or making it harder for you to resolve your tax debt. 

4. Talk with the taxing agency about lien subordination. 

Lien subordination is when one creditor agrees to take a back seat to another creditor. In some cases, a lien subordination can make it possible for you to get a loan against an asset. Then, you can use the loan to repay the tax liability. 

For instance, say the taxing authority placed a lien on your pick-up truck. You realize that you can get a loan against the truck for $15,000, and that is enough to cover your tax bill. However, to get the loan, you need the taxing authority to subordinate the lien. 

5. Hire a tax resolution specialist. 

If you're trying to make arrangements, remove, or subordinate a lien, it can be confusing to deal with the taxing agencies on your own. To make the process easier,  you may want to hire a tax resolution specialist. 

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