The Consequences of an IRS Lien

If a taxpayer is delinquent on paying the taxes they owe, the IRS has the power to file a lien against their property until the debt is paid. But how does it really affect you? A lien resolution attorney can advise on the consequences of an IRS lien and come up with solutions to resolve it.

Negative Consequences of Having a Lien Applied Against You

If the IRS places a tax lien against you, it is effectively a public document. People who look you up through the local court’s website will see that you have an unpaid tax debt – and that may have a negative effect on your ability to gain employment or to secure a loan. Since 2018, tax liens have no longer been reported on credit reports with the three credit bureaus so it will not have a direct impact on your credit score. But the larger negative consequence is that it impacts your ability to buy a home or obtain financing.

Will a Tax Lien Affect My Ability to Pay My Tax Debt?

A federal tax lien will hurt your ability to pay your tax debt because it would make it much more difficult to borrow against your home to pay the underlying tax. For most people, their home is their largest asset, and makes up their largest amount of equity. If you need to pay a large bill like an IRS balance due, and cannot tap into your home equity, that reduces your viable options.

The Effect of a Lien on the Ability to Sell Property

A person who has a tax lien on their property is not going to get a clean property title to then transfer to potential buyers. That will make it extremely difficult, or even impossible, to sell the home because that lien would then transfer to the buyer. No home buyer would want to pay a price that includes a tax lien against them.

Speak to an Attorney if You Are Concerned About the Consequences of an IRS Lien

Pontius Tax Law works with taxpayers who are in sensitive situations with the IRS and need a steady hand to guide them out of it. These situations will often involve liens on property. Schedule a consultation with our experienced tax lawyer and discuss the best ways to resolve the lien.