How The IRS Can Put A Tax Lien On Your Assets

A federal tax lien can be imposed when a U.S. citizen is delinquent in taxes owed on property, income taxes, or any other taxes owed to the federal government. Assuming you actually file a tax return each year, the IRS has three years to file an audit. If they do so in that time period, you may be susceptible to a tax lien if you do not have the funds to pay what you owe to the federal government.

Most of what you need to know about a federal tax lien is covered in two Internal Revenue Service codes.

• Section 6321 lays out the groundwork on how a tax lien can be levied on you. It states simply that any U.S. citizen who neglects or refuses to pay the tax amount owed, which can include additional monies such as interest, may be susceptible to a lien on their personal property in the amount that is owed.
• The second important section in the IRS code, 6322, addresses the period of the tax lien. Unless otherwise stated, the federal tax lien will be imposed at the time the assessment is made.

But a few things need to happen before the tax lien is put in motion. If you are audited before the three years are over in the statute of limitations, and it’s found that you owe taxes to the federal government, three things have to occur before the IRS can move forward with a tax lien: 

• You neglect or refuse to fully pay the tax lien within 10 days after the IRS notifies you about it
• The IRS must assess the liability before imposing a federal tax lien
• The IRS must send you a Notice and Demand for Payment, which is a bill that tells you how much you owe in taxes

If you can afford to make the payment in full or in the installments decided upon by the IRS, you are safe from a federal tax lien. But if you can’t afford the payments, under the doctrine of Glass City Bank v. United States, the tax lien applies not only to your current property, but any property that you may acquire during the life of the lien.

Of course you should always file your yearly tax returns. But this has an added importance when it comes to your rights in a federal tax lien case. That’s because for those U.S. citizens who file their taxes faithfully, the IRS has a limit of 10 year to collect taxes once the assessment has been made. But for someone who does not file their taxes, the IRS has no time limit in which they have to file an audit. There is, however, a limit of six years from the time the return was due that the IRS has to charge you with a crime.

You can contact a tax attorney. But, you can also seek advice from the Taxpayer Advocate Service, an office within the IRS that can lift wage and bank levies and establish installment agreements, which stops an enforced collection.