Dealing with a Tax Lien?

If you’ve received a notice about a tax lien from the IRS or the New Jersey Division of Taxation, it’s essential to understand what this means and how it can impact your financial future. A tax lien is more than just a notice of unpaid taxes—it’s a legal claim on your property, which can make it difficult to sell, refinance, or borrow against your assets. If left unresolved, it could escalate into more serious consequences, such as the government seizing your property or garnishing your wages.

While a tax lien does not immediately result in asset seizure, it creates a public record that prioritizes the government’s claim over other creditors. This can make it harder to obtain financing, and in some cases, it may even affect employment opportunities in industries that require financial responsibility. If you are facing a tax lien, working with an experienced tax lien lawyer can help you resolve the situation before it worsens.

What Is a Tax Lien and How Does It Work?

A tax lien is a legal claim placed on your property when you fail to pay your taxes. It allows the government to secure its interest in your assets, ensuring that tax debts are paid before any other financial obligations. This can apply to personal and business assets, including real estate, vehicles, bank accounts, and even accounts receivable in the case of business owners.

A tax lien differs from a tax levy. While a lien is essentially a claim against your property, a levy is the actual seizure of your assets to satisfy unpaid taxes. A lien does not mean that your property is taken away immediately, but it does restrict your ability to sell or refinance without resolving the tax debt first.

Once a tax lien is placed, it remains in effect until the debt is paid in full, settled through negotiation, or legally removed through a dispute process. Ignoring a tax lien can result in penalties, growing interest, and, in extreme cases, foreclosure or forced sale of your assets.

Why Tax Liens Happen

A tax lien can arise for several reasons, all stemming from unpaid taxes owed to the IRS or state tax authorities. Some taxpayers fall behind due to financial hardships, while others may be facing disputes over the accuracy of their tax assessments.

The most common reasons tax liens are placed on properties include:

1. Unpaid Federal or State Income Taxes – If you fail to pay your personal or business income taxes, the government may place a lien on your assets.
2. Property Tax Delinquency – Falling behind on property tax payments can lead to a lien filed by local tax authorities, which may result in a tax lien sale or foreclosure.
3. Unpaid Business Taxes – Payroll taxes, sales taxes, and other business-related tax obligations can trigger liens against company assets, including accounts receivable and equipment.
4. Tax Filing Errors or Miscalculations – Mistakes in tax returns or unreported income can result in an incorrect tax bill, leading to a lien if the discrepancy is not addressed.

How a Tax Lien Lawyer Can Help

Dealing with a tax lien on your own can be overwhelming. Tax laws are complex, and negotiating with the IRS or state tax authorities requires experience and knowledge of legal procedures. A tax lien lawyer can assess your situation, determine the best resolution strategy, and communicate with tax agencies on your behalf.

One way an attorney can help is by disputing incorrect tax liens. Sometimes, liens are filed due to errors in tax calculations or incorrect reporting by tax agencies. If you believe a lien was placed unfairly, a lawyer can gather evidence and challenge the claim, potentially removing it without requiring payment.

For those who do owe taxes, a lawyer can negotiate a settlement. The IRS and state tax authorities offer various options for resolving tax debt, including installment agreements, Offer in Compromise settlements, and tax lien withdrawals. A lawyer can help determine which option is most beneficial for you based on your financial situation.

Additionally, a tax lien lawyer can assist in securing a lien withdrawal or subordination. A withdrawal removes the public record of a tax lien, helping to restore your creditworthiness and allowing for future financial transactions. Conversely, subordination allows other creditors to take priority over the tax lien, making it easier to refinance a mortgage or obtain a loan.

What Happens If You Ignore a Tax Lien?

Ignoring a tax lien can have severe consequences. Although tax liens no longer appear on credit reports, they can still prevent you from securing loans, selling property, or obtaining business financing.

If the debt remains unpaid for too long, the tax lien can escalate into a tax levy, where the government actively seizes property, freezes bank accounts, or garnishes wages to collect the debt. The longer a tax lien is unresolved, the more penalties and interest accumulate, making it even harder to pay off.

Ignoring a tax lien may feel like the only option for those facing significant financial hardship. However, tax attorneys can often negotiate settlements or payment plans that are much more manageable than allowing the debt to grow unchecked. Taking action early can prevent unnecessary financial distress and protect your assets.

5-Step Guide to Resolving a Tax Lien

Ready to eliminate your tax lien issue? Follow these helpful steps to get the job done right:

1. Pay the Debt in Full (If Possible) – The quickest way to remove a tax lien is to pay off the full amount owed. Once the debt is satisfied, the IRS or state tax agency will typically release the lien within 30 days.
2. Negotiate an Offer in Compromise – If full payment isn’t an option, you may qualify for an Offer in Compromise, which allows you to settle for less than what you owe. This requires proving financial hardship; a tax lien lawyer can help with documentation and negotiations.
3. Set Up an Installment Agreement – For those who can’t pay all at once, an installment agreement provides a structured payment plan. Making consistent payments may lead to lien withdrawal over time.
4. Request Lien Subordination or Withdrawal – If immediate payment isn’t possible, you may apply for lien subordination, allowing other creditors to take priority or lien withdrawal, which removes the public notice of the lien and improves financial flexibility.
5. Dispute the Lien If It Was Filed in Error – If you believe the lien was placed incorrectly, you can dispute it with the IRS or state tax authorities. A tax attorney can help present strong evidence and navigate the legal process for removal.

Take Action Before a Tax Lien Becomes a Bigger Problem

A tax lien should not be ignored or delayed. The longer it remains unresolved, the more it can impact your financial well-being, making it difficult to access credit, sell property, or recover from financial hardship.

If you’re facing a tax lien, the best action is to consult with a lawyer as soon as possible. With the right legal guidance, you can explore your options, negotiate a settlement, and take steps to remove the lien before it escalates into a more serious issue.

For a consultation, call us at (877) 544-4743 or send us a message to learn more about how we can help. Taking action now can protect your financial future and provide peace of mind.