A tax lien is a legal claim laid by the government against your property such as financial assets, real estate, and personal property. There are other collection methods that the IRS has at its disposal and this is just one of them. When your delinquent tax account is liable to a federal tax lien, the IRS will send you an official notice. This notice usually comes in the form of a document titled Notice of Federal Tax Lien and usually contains several key pieces of information like:

• The type of tax debt you owe
• The years in which the debt in question was assessed
• The date when the balance was assessed
• The amount of the balance — not including penalties and interest — that will be assessed
• The last date on which the lien can be filed again
• For confirmation purposes, the last four digits of your Social Security number

When the IRS issues a tax lien, it enters the public record and grants the federal government claim to your assets and wages in the future. The lien is linked to all your property. This includes any bank and investment accounts; any real estate, or valuable items you own; and, if you have a business, accounts receivable. If any property that is under an IRS lien is sold, the sale income will automatically go to the government first. After your tax debt is paid, the government will send the remaining funds to you. If the full debt isn’t cleared by the sale of the property, the lien will remain on your other assets. Although the law grants the IRS has the right to seize your property, this action is not taken unless you do not take action in order to resolve your tax state after you receive a Notice of Federal Tax Lien. In most circumstances, a lien is filed for tax debts above $10,000. If you are worried about being issued a lien but are not able to pay the full amount you owe, try paying your balance down to below $10,000, if you can. Difference between a lien and a levy A lien is a legal claim against your property to guarantee payment of your tax debt. A levy on the other hand, actually takes the property to satisfy the tax debt. Hence, a levy is a legal seizure of your property to satisfy a tax debt. A federal tax liens lead can lead to levies. It is essential to note that to impose a levy; the IRS does not need an external warrant, as they are a self-sustaining governmental organization. How Long Does a Tax Lien Last?         

• Federal Tax Liens

Federal tax liens are governed by the IRS. IRS tax liens self-release after their statute of limitations expires; this occurs automatically after ten years. So, all you have to do is to wait ten years for the federal tax lien statute of limitations to terminate and everything settles, right? Well, not precisely; there’s a reason so few taxpayers choose to wait out the statute of limitations. If you buy any asset or earn any money through income during that 10-year period, the IRS can, and will seize it to pay off the outstanding tax debt. An active tax lien can destroy your credit, making it a huge challenge to get a mortgage or any other sort of loan. 

• State Tax Lien

As the name implies, state tax liens are evaluated at the state level. Each state has its own rules and procedures regarding lien removal. Many states will offer fewer resolutions than the IRS. In order to know what options you have when placed under a state tax lien, it is highly advised that you consult with a tax professional. How to Remove a Tax Lien

• File an Appeal

When it comes to the collections process, the law grants many rights and protections to taxpayers. One of such protection is the right to notices from the IRS and the right to adequate time to settle tax problems. Another such right taxpayers have is the right to appeal collection processes by the IRS. When you first receive a notice of a lien from the IRS, begin by giving them a call. While this might not be a success, it has the potential to end your worries and speculations quickly and easily if it is successful. If your initial phone call with the IRS is unsuccessful, you can request an official appeal by filing Form 9423. The appeals process isn’t always guaranteed to work, but it is always worth a trial. And if you have a compelling case, and if removing the lien can obviously enhance the IRS’ chances of receiving the outstanding amount then appealing the lien may be the fastest and easiest way to get it removed.

• Pay Your Back Taxes

If your initial appeals do not succeed, a suitable way to remove a lien is to pay your back taxes as soon as you can; the longer you owe unpaid taxes, the more worried and tensed you become.  The first and most uncomplicated way to pay you back taxes is to pay in full. If paying in full is within the assumption of financial possibility, it is highly recommended as it accumulates neither interest nor penalties. If you can’t afford to pay in full, you may be eligible for a payment plan with the Internal Revenue Service. In simple terms, a payment plan is an agreement set up with the IRS to pay the taxes you owe within an extended but defined period of time. There are two types of payment plans: short-term and long-term. A short-term payment plan, or Full Payment Agreement, is a 120-day extension to pay all you owe. There are no extra fees for a full payment Agreement, but interest and applicable penalties still accumulate until your liability is paid. However, if you are going through financial hardship, full payment agreements can put a strain on your bank account and your peace of mind. If a Full Payment Agreement is not financially achievable, you may be qualified for a Long-Term Payment Plan, which entails an Installment Agreement. An Installment Agreement lets you to pay your taxes over an added period of time while avoiding collection actions from the IRS such as liens, garnishments, and levies. When making use of an Installment Agreement plan to pay your taxes, you will still owe interest and late penalties. However, Installation Agreements let you to break up the amount you owe into much more affordable portions.