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Tax Lien
A tax lien is one of the IRS' enforced collection efforts where it takes aggressive actions to collect on its tax debt.  The IRS can impose a tax lien for delinquent taxes owed on property, or as a result of failure to pay income taxes or other taxes. 

The IRS will send a notice of its intent to file a lien against your property to your last known address and to your local recorder's office (a local government office that keeps records of real estate transactions). This is your last chance to prevent the lien, which should be your number one goal instead of looking to remove a lien after its in place.

Once a lien is in effect, it has several negative consequences:
1.  The lien will be recorded by the major credit reporting agencies and serve as a public notice that you owe the IRS money. Your credit rating will be severely damaged, and you will probably have great difficulty borrowing money in the future.

2.  If you sell the property that has a lien filed against it, the IRS will automatically take the amount it thinks it is owed before you receive any money from the sale.

Once a lien is in place, you have few options to have it removed. Your best option continues to be settling your tax bill in full. (While the IRS may still accept a payment arrangement, the lien will likely stay in place until your entire tax debt, including interest and penalties, is paid.) Another option is a complex arrangement called lien subordination. Through this arrangement, the IRS may allow you to take out a second mortgage, or some other loan against the property the IRS issued a lien on. You would then be able to use the money from your loan to pay your tax debt.

Bear in mind that this is an involved procedure that may require professional know how to carry out, and has ramifications that go beyond your tax debt. For example, while you may have paid your tax debt through lien subordination, you may still have to direct payments to your bank to repay the second mortgage. You should consult with a qualified tax professional before deciding if lien subordination is right for you.

 
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