Nina Olson of the National Taxpayer Advocate discusses the many problems associated with federal tax liens and the request for a withdrawal of a federal tax lien.

A tax lien is a federal notice that puts creditors on notice of a tax lien, or rights the IRS has a priority of payment on back taxes or tax debt you may owe. A federal tax lien attaches to all property a taxpayer may own at the time of the federal tax lien and even extends to property acquired after the filing of the lien up until such time the tax debt expires or is otherwise paid.

Filing a federal tax lien in many cases is ineffective in helping to promote collection of the tax debt. A federal tax lien is harsh in that it can significantly destroy a taxpayer’s credit, ability to get financing, find or retain a job, secure affordable housing or insurance and ultimately pay the tax bill. ¬†Even when the lien is paid in full, it remains on the taxpayer’s credit report for many years thereafter. ¬†Under the current system, the IRS systematically files tax liens without further consideration of how a tax lien may impact these factors.

You can sometimes obtain relief where you can show that the tax lien causes harm, stops your ability to comply with past tax debt obligations by negatively impacting your ability to borrow, or hurts you in a way that negatively impacts your future tax obligations and does not necessarily improve the government’s ability to collect tax debt by requesting a tax lien withdrawal.