How to Obtain a Tax Lien Release in Illinois

It should come as no surprise that failing to pay your taxes in the United States can land you in a world of legal trouble. Penalties for failing to file or pay taxes on time can be stiff and often include fines, monthly late fees, and interest charges. If you do not pay your taxes on time, the Internal Revenue Service (IRS) will initiate the collection process by first sending you a bill for the amount owed, along with a demand letter indicating that the full balance must be paid immediately. If a delinquent taxpayer continues to ignore their debt obligation, the IRS will engage in collection enforcement actions such as filing a federal tax lien or implementing a federal tax levy.

Federal Tax Liens and Tax Levies

According to IRS.com, if a taxpayer fails to pay their overdue balance within 10 days of receiving the first notice of outstanding taxes owed, the IRS has the legal right to file a “Notice of Federal Tax Lien” in the public record. This notice establishes a lien against all of the taxpayer’s current real or personal property, as well as against any other property that the taxpayer may acquire in the future. The Notice of Federal Tax Lien puts creditors on notice that the government has a legal right to the delinquent taxpayer’s property. To put it mildly, tax liens can be a huge inconvenience. For example, if the IRS imposes a lien on your home, you must be released from the lien before you can legally sell or refinance your home.

The terms “tax lien” and “tax levy” are often confused, but these are very different types collection enforcement actions. As described above, a tax lien gives the government a legal right to property, but a tax levy is an outright seizure of property. A tax levy can be issued against a variety of different assets including; wages, bank accounts, retirement accounts, houses, cars, boats, etc.

How to Obtain a Tax Lien Release

If the government has issued a tax lien against your property it is important to understand your legal options and consult with an experienced lien release lawyer right away. Your lawyer will advise you of your legal options, but tax lien releases are generally obtained in one of the following ways:

Paying Your Debt: The most simple way to obtain a tax release is to pay your tax debt in full. After you have paid what you owe the IRS will release your tax lien within 30 days.

Discharge of Property: The IRS will sometimes issue a “discharge,” which removes a tax lien from specific property, if the IRS determines that doing so is in their best interest. For example, the IRS may discharge their tax lien on a house so that the taxpayer can sell the house and the IRS can recoup what they are owed from the sale of the property.

Subordination: Sometimes the IRS will “subordinate” their tax lien so that a junior creditor to be paid before the government’s tax lien is paid. The IRS will sometimes allow subordination so that a taxpayer can refinance or receive a mortgage in order to obtain the funds needed to repay their tax debt.

Withdrawal: A withdrawal of a filed Notice of Federal Tax Lien shows creditors that the IRS no longer has a lien on the taxpayer’s property, however, after a withdrawal is filed the taxpayer is still liable for their outstanding taxes. The IRS can issue a withdrawal if the lien was premature, if the taxpayer enters into a repayment plan with the IRS, if filing a withdrawal would facilitate the collection of the tax debt, or if the withdrawal would be in the best interest of both the taxpayer and the United States.

Need Legal Advice?

If you live in Illinois or Indiana and are interested in obtaining a tax lien release contact the experienced lien release lawyers at the Bentz Holguin Law Firm today. Our lawyers would be happy to discuss your tax situation during a free and confidential consultation.