April 15th is in most taxpayers’ rearview mirrors–except for those with an outstanding tax debt.

There are provisions for extending the deadline date for filing, but the extension must be accompanied by a payment, or the clock starts ticking for accruing of interest and penalties and setting in motion a levy or a lien.


Settle up or face the dreaded L-words

With its power to levy, the IRS can seize and sell off your property or assets. Said property could include your home, car or boat. The IRS could also seize your wages and other financial assets such as:

  • retirement, bank and investment accounts
  • rent incomes
  • cash value of your life insurance policy

There are three basic criteria that must be met before the IRS enforces a tax levy:

  1. You actually owe taxes and have received a Notice and Demand for Payment in the mail.
  2. You did not pay the tax owed after receiving the final notice, including a notice of your right to a hearing.
  3. You had the hearing and appeal, but couldn’t prove your case.

The foregoing process occurs over a period of about 60 days. It also includes an opportunity for you to appeal an adverse ruling, which is a lengthy and complicated process where the services of a qualified tax expert would be helpful.

A lien weighs down your property and credit standing.

A lien, on the other hand, is a legal claim against your property because of a tax debt. It differs from a levy in that the government does not actually take your property. Rather, the lien prevents you from liquidating or otherwise disposing of the property.

The criteria the IRS uses for imposing a lien are the same as a levy.

What a lien does

A lien attaches itself to all your assets–property, vehicles, and securities including future assets you acquire when the lien is in effect. A lien will also significantly handicap your personal credit rating.

If you own a small business, all the property owned by the business may be subject to the lien. Bankruptcy is not an escape, because a federal tax lien continues past the bankruptcy settlement and any debt divestiture.

Relief from levies and liens

The IRS has the option to release a levy if you can prove “immediate economic hardship.” Such release won’t erase the tax bill, but will give you time to work out a payment plan or find other means to discharge your tax debt.

Likewise, the IRS will remove a tax lien on your property when you pay the outstanding balance in full or satisfy the outstanding balance through a successful offer in compromise, for example. Also, a lien determination can become unenforceable if it is overtaken by the ten-year statute of limitations.


Financial and business setbacks sometimes happen to responsible, honorable people. The IRS has no interest in punishing or impoverishing those who make an honest effort to discharge their tax obligations.

Don’t panic and don’t procrastinate. You have 30 days to respond to the IRS written notice, and your best course of action is to get professional assistance. Contact us today to find out how we can help.