About a month ago, we wrote a post about tax liens and tax levies and how devastating these things can be. Today, we're going to focus on the former and talk about how you can avoid a tax lien with effective communication with the IRS.
A tax lien is a claim on your property. The IRS will submit a lien and it will be placed on your record if you fail to pay the IRS what they say you owe them. When the lien is in place, it is nearly impossible to secure new lines of credit and to make any critical financial moves or decisions that you may want to make. Obviously you don't want that, so it is best to eliminate the chance of a tax lien before it becomes reality.
To do so, you should talk with the IRS and respond to any inquests, requests, letters, emails or phone calls they make. That doesn't mean you have to agree with what they say or even accept any agreement that they give you -- but you should not ignore their inquests. It will lead to a tax lien more times than not.
What you should do is talk with an experienced tax attorney and get your plan in order. You should try to pay the IRS what you can, even if that isn't all of what you owe. At least then the IRS will know you are acting in good faith, and you can proceed with payments options and other offers to try to rectify the situation.
Source: Motley Fool, "10 Survival Tips When Tax Collectors Call," April 3, 2016