Notice

• When the IRS determines that a consumer owes taxes, it will send a statement of account and demand payment. The longer this balance goes unpaid, the more late charges and fees are accumulated, until such time that the IRS files a lien against a property.
  
  After the IRS has assessed the liability of the debt and sent a notice of demand for payment, the consumer has 10 days to respond and either pay the balance or dispute it. If the consumer fails to remit the balance due or dispute it within 10 days of the notice, the lien is filed.
  
  

Types of Property

• The IRS can file a lien against all properties that a consumer has. This includes a house, a car, a second home or vacation property. Even a personal business can have a lien placed against it. In addition to property already owned, the IRS can attach a lien to any property that the consumer obtains while the balance of the lien remains unpaid.
  
  Until the balance is paid in full by either using the proceeds of a sale of property or paying the lien off using cash, the IRS holds an interest in every piece of property that the lien is attached to and has a legal ownership interest, meaning that it has the right to seize and take ownership of a property, and even foreclose on a home.
  
  

Credit Impact

• In addition to the financial consequences and legal rights to property that the IRS obtains with a lien, there is also a negative impact on a consumer's credit history. Once a lien has been recorded, all creditors are notified of the lien, and it is added to a credit report for the consumer until it is paid in full. There is no time limit on how long an IRS lien can remain on a credit report. It will continue to impact a credit history as long as it goes unpaid.
  
  The effect of a lien on purchasing power is also a factor to take into consideration. It is impossible to obtain a new loan for a home, car or credit card if an IRS tax lien is on a credit report.
  
  

Discharge

• To satisfy an IRS tax lien, sending a check or allocating funds from a property sale is not enough. A consumer must apply for discharge of a federal lien directly from the IRS before the lien is extinguished. If the proper paperwork is not filed with the IRS, the lien can remain on a credit report and not be reported as paid.
  
  

Lien Withdrawal

• In certain cases, the IRS can opt to withdraw a lien placed on property. For example, a lien will be withdrawn if a consumer agrees to enter into an installment payment arrangement with the IRS. To do this, the IRS will often require a monthly bank draft be sent directly from the consumer's bank account.
  
  

Lien Appeal

• If consumers believe that a lien was filed against property without due cause, they can appeal the lien in court. During the appeals process, the IRS will cease collection activity on a past due balance until a resolution is achieved within the court system. The most common resolutions are either a validation of the lien or withdrawal of the lien. However, the responsibility to prove an incorrect filing rests completely with the consumer.