The IRS or Internal Revenue Service files a lien when taxpayers fail to pay their tax debts on time. A tax lien is a legal claim on the taxpayer’s property, including their assets, real estate, and personal property, that secures the government’s interest in the taxpayer’s debt.
Let us discuss in this post when does IRS file tax lien.
The IRS usually files a tax lien when a taxpayer has an unpaid tax debt of $10,000 or more, and they have failed to respond to the IRS’s notices and demands for payment. The lien is filed in the county or state where the taxpayer lives or where the property is located, and it becomes a matter of public record.
Once the lien is filed, it can affect the taxpayer’s credit score, making it difficult for them to obtain credit or loans, and it can also make it difficult for the taxpayer to sell their property. The lien can remain in place until the tax debt is paid in full or until the statute of limitations for collecting the debt has expired.
It is important to note that the IRS must follow certain procedures before filing a tax lien. The IRS must first send the taxpayer a Notice and Demand for Payment, informing them of the amount of the tax debt owed and the deadline for payment.
If the taxpayer does not pay or make arrangements to pay, the IRS will send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing, giving the taxpayer an opportunity to dispute the debt or make payment arrangements. If the taxpayer still does not respond, the IRS may then file a tax lien.
Taxpayers who receive a Notice and Demand for Payment or a Final Notice of Intent to Levy should take action promptly to avoid a tax lien. They should contact the IRS to discuss payment options or seek the assistance of a tax professional if necessary