If the IRS sends me a valid tax bill, and I can’t pay… What happens next?

mums-219436_150Whenever you owe Uncle Sam and don’t pay, a claim against you by the US Treasury arises by law. This claim is called a tax lien. The lien automatically attaches to pretty much everything you own or have a right to—your home, your bank account, your paychecks.
The initial IRS notice is not public infomration; for this reason it’s called a ‘secret’ or ‘statutory’ lien. If you don’t pay within 30 days, however, thet IRS has a right to file a notice in the public records showing your tax debt. The federal government issues over ½ million notices each year. It’s officially called a Notice of Federal Tax Lien, and will be recorded in the city or county courthouse where you work, live, or own real estate.
Just as a recorded mortgage tells anyone who searches the public records or pulls a credit report that you owe the mortgage company, a Notice of Federal Tax Lien tells the world you owe the IRS. It damages your credit rating, scares off potential creditors, and makes it difficult to finance future purchases.


Posted in Dealing with the IRS.

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