When you fail to make federal or state tax payments willingly, the government may seize your income or property to pay your overdue tax debt. In some cases, the federal government may place a tax lien on your property, which is a legal claim against your assets. When you receive a tax lien, the government may be able to take your property or income to pay your outstanding debt.
However, many people wonder whether tax liens last forever or eventually expire. Good news — tax liens do have an expiration date. If you’re wondering, “Do tax liens expire?” read ahead. Then contact our team at Levy & Associates to speak with a tax expert about your lien.
As an American resident, you have a tax liability that requires you to give a certain percentage of your income to the government each year. When you fail to make this tax payment, the Internal Revenue Service can lay claim to your income, property, or assets to cover your overdue payments.
A tax lien is a notice that the government has established a claim over your property. This notice does not necessarily mean that the IRS will come to your home and seize your car or other property. Instead, if you attempt to sell the property included in the lien, the government would take the proceeds from the sale to cover your tax debt.
Once you receive a tax lien, it may appear on your credit report and significantly damage your credit score. (Note: the three major credit bureaus have stopped including tax liens on credit reports as of 2018).
This negative item could hinder your financial opportunities. It could also prevent you from selling any assets attached to the lien.
Many people wonder, “Do tax liens expire eventually?”
Tax liens do not remain in place forever. Instead, most tax liens have an expiration date ten years after the IRS issues the lien. The IRS may extend this expiration date in a few circumstances, such as if you filed an offer in compromise that included an agreement to extend the lien. The IRS can also refile the tax lien within a designated period, extending its duration.
Once your tax lien expires, the IRS will not have a claim over your property any longer. However, most people do not wait until the lien’s expiration date. Tax liens can limit your financial opportunities significantly, and going ten years without access to credit can be challenging.
Paying your overdue tax debt is the primary way to release a federal tax lien. If you have the money to pay your outstanding balance or believe you can come up with the money shortly, we recommend doing everything you can to pay off this debt.
However, tax liens often arise when taxpayers owe tens of thousands of dollars in tax debt that they simply cannot come up with in a reasonable time. In these cases, many taxpayers file an offer in compromise with the IRS, which allows them to settle their tax debt for less than the total amount. Through an offer in compromise, you could agree to a payment plan.
You can also ask the IRS to withdraw your tax lien from specific assets or property. However, navigating this process effectively can be challenging. We recommend asking our tax experts for assistance to ensure that you approach your tax lien strategically and receive the best outcomes from an offer in compromise.
Need help with a tax lien? Contact our team at Levy & Associates today at 800-TAX-LEVY to schedule an appointment with a tax expert.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.