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How to Get Rid of a Tax Lien on Your Business

By George Khoury, Esq. on November 01, 2016 | Last updated on March 21, 2019

Even if you remember to declare the pennies on your eyes, an IRS tax lien can have a significant impact on your business. If you owe money to the IRS or state tax board, and are behind in making payments, the IRS or state tax collector can put a tax lien on your business assets. Having a tax lien can prevent your business from selling assets, or getting new lines of credit, and could potentially affect existing lines of credit.

A tax lien operates just like any other lien except that the debt owed that creates the lien is due to unpaid taxes. If you ignore the lien, the IRS may levy your assets in order to satisfy the debt. Below are the three ways that you can get rid of your business's tax lien.

Pay the Lien Amount in Full

The simplest way to have a tax lien removed is by paying the underlying debt in full. The IRS will remove the lien within 30 days of being paid in full. Additionally, once the lien is paid and withdrawn, if you operate your business as a sole proprietor, you can request that credit reporting agencies remove the tax lien from your credit report.

Offer in Compromise

While you may think that the IRS will make you pay every last penny that you owe, it is not unusual for the IRS and state tax boards to accept offers to compromise tax debt. While you have to be sure you qualify and follow all the rules laid out, frequently these offers, if reasonable, will be accepted. Once an offer to compromise has been accepted and paid, an individual or business will be able to have the tax lien lifted.

Paying on an Installment Plan

Despite their reputation for financial cruelty, the IRS is typically willing to allow debtors to enter into payment plans to pay off a tax lien or other tax debt. While there are requirements to qualify for a payment plan, most small businesses and individuals will meet the basic requirements.

Additionally, the payment plans are generally flexible in allowing debtors to set their monthly payments at a rate they can afford so long as it will satisfy the debt. Additionally, once successfully on an installment plan, a debtor can request to have the lien withdrawn so as to prevent any further damage to their credit.

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