All You Need to Know About Federal Tax Lien Releases in Oklahoma

What is an IRS Federal Tax Lien?

A federal tax lien indicates that a person owes the Internal Revenue Service (IRS) an amount of money in tax arrears. The lien allows the government to place a claim on your property and seize it if necessary to offset your tax debt. It comes after the IRS has sent you a written demand notice of your outstanding taxes and you failed to pay within the required time.

Having the IRS place a lien against your property is not a good experience, and there is a possibility that you could lose your home, business, or other assets. 

However, there are ways to settle your tax debt and avoid or eliminate existing tax liens. If you owe a lot in federal taxes, or there is already a federal tax lien against your property, it is vital for you to be aware of some of the common ways to avoid tax liens and how a tax resolution attorney can help you. Find out more below.

What is an IRS Tax Lien Release?

A tax lien release is the IRS’s removal of a tax lien. Under the U.S. tax laws, the IRS is required to issue a federal tax lien release within 30 days if:

  • The tax debt is paid. 
  • It becomes legally impossible to collect the tax, such as if the ten-year period under the IRS statute of limitations has passed.
  • The IRS accepts a bond in satisfaction of the tax debt.

Once you fulfill any of those conditions, the IRS will lift the tax lien. This means the IRS no longer has a claim on your real or personal property. 

Once the tax lien is released, the IRS usually issues a certificate of release in favor of the taxpayer.

Partial IRS Tax Lien Release

Although the Internal Revenue Code (IRC) does not provide for partial tax lien releases, the IRS, in some cases where more than one person shares tax liability, may allow for the partial release of tax liability as contained in the Notice of Federal Tax Lien (NFTL). Such circumstances include the following:

  • When one person successfully fulfills their obligation under an NFTL that names multiple taxpayers, the IRS would issue a partial lien release to that taxpayer if the other party is yet to complete their payment.
  • One of the persons who share joint tax liability obtained a bankruptcy discharge.
  • One of the liable persons requests an offer in compromise (OIC), and the amount offered is accepted by the IRS.
  •  An innocent spouse determination is made in favor of one of the liable persons.

Partial lien releases are not automatic and have to be obtained on request. The IRS individually examines partial lien release requests on an individual basis, so be prepared to provide extensive paperwork to support your request if you intend to follow this path.

If you’re unsure whether you’re eligible for a partial tax lien release, you can seek help from an IRS tax debt professional in your location.

How to Pay Off Back Taxes and Get a Federal Tax Lien Release 

The easiest way to secure a tax lien release is by paying up your tax debt in full. However, the IRS recognizes that achieving a full payment could sometimes prove problematic for many people. Hence, they are often willing to set up other payment arrangements that make it easier for the taxpayer to fulfill their obligations. 

Such arrangements are usually offered under the IRS fresh start program and include the following:

Offer in Compromise

An offer in compromise (OIC) allows you to settle your tax debt for less than what you owe. To qualify, you need to provide extensive financial information and satisfy stringent conditions. The IRS will only accept an offer if it is convinced that you cannot offset your tax debt in installments or a lump sum payment. The decision is determined by your ability to pay, your income, expenses, and your asset equity.

If your offer is accepted, you may have up to two years to make the outstanding estimated tax payments and have any tax liens on your property withdrawn.

You can check the IRS website to find out whether you’re eligible for an OIC or contact a seasoned tax attorney in Oklahoma City with your questions.

Installment Agreement Payment Plans

If you cannot clear your tax bill in a single payment, the IRS allows you to set up an agreement for installment agreement payment plans. Payment plans could be long-term or short-term.

Short-term payment plans require you to pay the outstanding tax, including penalties and interests, within 180 days.

Long-term payment plans allow you a more extended repayment period. You can make the required monthly payments by check, electronic transfer, credit/debit cards, or money orders. Alternatively, you can establish a direct debit installment agreement and pay such taxes through an automatic direct debit from your checking account each month. 

Advantages of a Direct Debit Installment Agreement (DDIA)

There are several advantages to having a direct debit installment agreement for your back taxes.

Apart from the convenience, having an active direct debit agreement can help you secure an NFTL withdrawal if:

  • The unpaid tax balance is $25,000 or less
  • Your payment will be completed within 60 months
  • You make a withdrawal request in writing
  • You have complied with other filing and payment requirements
  • You have made at least three consecutive payments under your agreement without any history of default.

So, as much as tax liens are only released upon full payment of the sum, a DDIA can help you avoid tax liens, so you do not have to worry about securing a release. You primarily need to be concerned with ensuring your checking account is funded, and payments are consistent.

If you already have a regular installment plan, you can convert it to a DDIA. A Hutton Tax Solutions attorney can assist you in this process.

Payment Guarantee Bonds

If you have a lot of back taxes, you can also post a payment guarantee bond as collateral to ensure that you pay your taxes. In that case, an NFTL would not be issued against you as long as the collateral or security agreement remains active.

However, this option could be challenging for most people to fulfill because, in most instances, the cost of the bond would be equivalent to or perhaps more than paying the taxes outright. It may be more suitable for companies or corporations that already possess such bonds as part of their business activities.

How a Federal Tax Attorney Can Help You

When facing a federal tax lien, you cannot afford to play guessing games as you seek solutions. Consider consulting skilled federal tax resolution attorneys for legal advice and a suitable strategy to get you out of tax debt and ensure your future tax compliance.

Your tax attorney can evaluate your unique circumstances and help you develop a suitable strategy that could help you get out of tax debt quickly and get your tax lien released. This could include determining your eligibility for IRS tax concessions and facilitating the relevant applications on your behalf. Your attorney could also represent you during IRS negotiations for reduced taxes or installment payments.

So, if you’re struggling with federal tax liens, back taxes, or tax levies on your property in Oklahoma, consider contacting an Oklahoma City tax attorney as soon as possible to get the help you need.

Get Help With IRS Tax Liens From Experienced Tax Attorneys in Oklahoma

If you are dealing with an IRS tax lien on your property or have further questions about getting lien releases and the IRS Fresh Start Program, contact us at Hutton Tax Solutions.

At our law firm, you can get IRS help and speak directly with a tax attorney who can evaluate your case and help you develop a personalized strategy to resolve your federal tax debt. 

Contact us today to get started.