Northeast Ohio Tax Lawyer Michael McNamee Shares What to Expect After a Federal Tax Lien Has Been Filed
A CP 90 Notice from the IRS is a notice of federal tax lien that is a public notice to creditors. It notifies them that there is a federal tax lien attached to all of the taxpayer's current and future property and rights to property. The CP 90 Notice is normally filed with the local county recorder or county clerk's office.
This federal tax lien is sometimes reported by credit agencies and can have a severe negative effect on your credit score. It can prevent a taxpayer from refinancing your house or may hinder you in selling your home. Contact our tax dispute law firm for assistance.
What to Do if a Federal Tax Lien Is Filed
The best option if a federal tax lien is filed against a taxpayer is to fully pay the amount that is owed. Assuming this option is not feasible, then the taxpayer should enter into an installment plan with the IRS. Entering into a payment plan with the IRS will prevent them from pursuing further collection activity against the taxpayer (the IRS will not garnish bank accounts or wages). If an installment plan is entered into with the IRS, then they may agree to ‘withdraw' the federal tax lien.
How a Tax Lien Can Be Withdrawn
The tax lien ‘withdrawn' simply means that the IRS is abandoning their lien priority. It does not mean that the federal tax lien is released or that the taxpayer is no longer liable for the tax debt.
The tax lien can be ‘withdrawn' if the taxpayer has:
- Entered into an installment plan with the IRS
- If the IRS did not follow the proper procedures in issuing the tax lien
- If the lien was filed during the automatic stay provisions while the taxpayer was in bankruptcy
- Withdrawing the lien would help you in paying off the taxes more quickly
Taxpayers Can Appeal Notice of Federal Tax Lien
Within five days of the first filing of the federal tax lien, the IRS must send the taxpayer a notice that they have the option to appeal the federal tax lien. The taxpayer is permitted a Collection Due Process Hearing. This hearing must be requested in writing by the taxpayer by the due date of the notice. If, as a result of the Due Process Hearing, the taxpayer still disagrees with the decision, then they will have 30 days to file a Petition with the Tax Court.
Statute of Limitations
The general rule is that the IRS has ten years to collect on a tax debt, after which the IRS can no longer collect on the debt. (However, there are several exceptions to this ten-year rule). If the statute of limitations has run on a federal tax lien, then the taxpayer can request from the IRS that they file a lien release with the local county. Often, the taxpayer will have to request this lien release on their own.