If you owe back taxes to the IRS, the IRS often files a tax lien against you to help secure their interest. This may happen regardless of any IRS negotiated settlement such as an installment agreement, offer in compromise or currently not collectible status.

A tax lien is simply a right the IRS asserts against all other creditors to collect any amounts the government is owed, generally before other creditors can collect their money. A tax lien is public record and can adversely impact your ability to obtain credit, qualify for certain purchases and even obtain affordable housing or insurance.

Previously, the IRS would file a tax lien if you owed them over $10,000.  Under new IRS procedures, the IRS will generally now only file a tax lien only if you owe over $25,000. If you owe back taxes both individually and on a tax debt on an owned businesl, the $25,000 applies to the total debt including interest and the penalties.

An effective deterrent to the filing of a tax lien is the Direct Debit Installment Agreement. The Direct Debit Installment Agreement means that you agree to allow the IRS to take monthly payments of an agreed-upon amount directly from your bank account.  Statistically, the IRS has been able to increase collections through such an agreement rather than waiting for your check to arrive.

To qualify, you must agree to pay the whole debt, generally within 60 months or before the lapse of the statute of limitations if shorter. Second, you must be in full compliance, or have filed all tax returns currently due, to qualify. Third, you must at least make three consecutive electronic payments without default.