Accounting Articles > Federal Income Tax:

How to pay off a federal tax lien

Cash still works in this country. Checks are great as long as they cash. You can cash out of a credit card if you must. Of course most of the rates that the credit card companies would charge you may be less than any interest and penalty charged on federal government tax liens. Let's also remember that the enforcement actions available to credit card companies pale in comparison to the power and abilities of your average IRS Agent. Credit card companies can't take your house.

But if your tax problem has actually gone to the lien stage, then those options are probably not still available to you. If not, what can we do?

1. Our first job is to figure out if the amount that the government is seeking is justified. In many cases where a taxpayer has not responded to letters or sent in returns, the IRS has estimated an income or payroll tax liability on your behalf. They generally estimate quite high. If you don't pay that amount or respond in any way, then the lien amount placed on your assets could be quite unreasonable. Filing the returns with the correct amounts of tax will be quite helpful. If the returns that were filed were done incorrectly, then calling us so that we can do an amendment could save you an enormous amount of money.
2. Once the amount owed to the government is correct, if you cannot borrow the money then you have two choices; a payment plan or an offer and compromise. For more information on tax lien payment plans please go to the appropriate section in our standardized accounting packages section. We will negotiate and file a payment plan for as little as $500.
3. Offer and Compromise plans are much more complicated. In general let's say that you owe $500,000 to the IRS, and are completely incapable of coming up with that amount. You would offer a lesser amount and the IRS would compromise with an amount that was one dollar more than they could expect to collect in a reasonable amount of time. We do these all the time. Please call our offices for more information.

The whole point is that forgetting about this problem is not a reasonable solution. As highly recommended CPA's and Enrolled Agents providing tax accounting services in the Chicagoland Area, we can help. No more government liens. No more levies. No more harassing telephone calls. No more unannounced IRS Agent visits. Don't try to handle this yourself. Call or e-mail one of our specialists today.