What to Know About an IRS Tax Lien

All wage and income earners across the country have the responsibility to file their tax forms with the IRS each year. Depending on your situation, filing a tax form after the end of the year could result in a sizable tax return for overpayments throughout the year. However, in other situations, someone may find themselves past due on tax payments. If you are behind on your tax payments and are not able to come current, it could result in various penalties. One common penalty is to be assessed an IRS tax lien.

What is a Tax Lien?

If you do fall behind on your taxes and the IRS does file a tax lien, it could cause challenges for you. A tax lien is ultimately a legal claim to any assets that the IRS chooses to apply the lien to. This can include your bank accounts, your home, your car, or other major assets. A tax lien is often a warning and beginning step in a more formal collections process. If a lien has been assessed, you may not be able to access all of your money in your accounts or sell your home or other assets.

What Can Happen After a Tax Lien

If there is a tax lien filed and applied to your assets, there could be further steps that will be taken to collect the past due tax bill. The IRS may then garnish your wages, take money from your account, or even post a tax levy. With a tax levy, the IRS will actually seize your assets and then liquidate them in an attempt to cover the outstanding tax bill.

How to Avoid a Lien or Have One Lifted

There are various challenges that can come if a tax lien is filed against your assets. Due to this, avoiding a tax lien to begin with is very important. There are various steps and tips that you can follow to prevent tax liens and have them lifted if one is filed.

Pay Taxes on Time

The most effective way to avoid tax liens is to file your taxes on time and pay any tax liability by the due date. Generally, taxes need to be paid by the 15th of each year. Ensuring that your payroll provider is taking out the right amount, or that you are paying the IRS directly throughout the year, you can avoid a surprise bill and may not have to pay anything at the end of the year.

Enter into Fresh Start Program

Another option if you have fallen behind on taxes owed to the IRS is to enter into an agreement to repay the debt. For most people, this can mean getting a loan through the IRS fresh start program. For those that owe less than $50,000 in past due taxes and earn less than a certain amount, you can quickly get into a repayment plan that will allow you to repay the past due amount over a 6-year schedule. Once you have entered into a repayment plan, your lien should be lifted.


If you are under significant financial stress, filing bankruptcy can be a good strategy to avoid tax liens as well. If you have filed for bankruptcy already, the automatic stay provisions will prevent the IRS from filing a lien on your assets. However, filing bankruptcy after the lien is filed may not help.

If you have fallen behind on IRS tax payments, you could be assessed with a tax lien. If a lien is filed on your assets, it is important to understand what the lien is and how you can manage it effectively.