Understanding IRS Installment Agreements and Tax Liens
Owing back taxes can lead to serious consequences like tax liens, but setting up an IRS installment agreement may help avoid or remove them. Victory Tax Lawyers offers free consultations and works nationwide to help taxpayers navigate their options and protect their financial future.
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IRS Installment Agreement and Tax Liens: How They Are Connected
An IRS Installment Agreement is a structured payment plan that allows taxpayers to pay off their tax debt over time. While it’s a useful tool for managing tax liabilities, it’s important to understand its relationship with Tax Liens:
1. Tax Liens Defined:
- A Tax Lien is a legal claim by the government on your property and assets due to unpaid tax debt.
- It serves as a way for the IRS to secure its interest in your property and assets until the debt is fully paid.
- A Tax Lien can affect your credit score and may limit your ability to sell or transfer property.
2. Installment Agreements and Tax Liens:
- Setting up an IRS Installment Agreement does not automatically remove an existing Tax Lien.
- However, it can prevent the IRS from initiating a new Tax Lien if you meet certain criteria.
- If you are already subject to a Tax Lien, making consistent payments through an Installment Agreement can demonstrate your commitment to resolving the debt.
3. The Process:
- To remove an existing Tax Lien, you may need to request a “Withdrawal of Notice of Federal Tax Lien” from the IRS once your Installment Agreement is in place.
- The IRS considers factors like compliance with the agreement and the amount of the debt when deciding to withdraw a Tax Lien.
- Successfully completing your Installment Agreement can lead to the eventual removal of the Tax Lien, improving your financial flexibility.
It’s essential to work closely with the IRS and possibly seek professional advice when dealing with Tax Liens and Installment Agreements. Understanding how they interact can help you make informed decisions to manage and ultimately resolve your tax debt.
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