If you fail to take action to settle a lingering tax debt in California, you can expect to receive a Notice of State Tax Lien. Tax liens are legal claims to property as security for unpaid, unresolved tax debts. Unfortunately, owing even just a small amount in taxes can put you at risk for a lien. In California, the state taxing authorities will try to recoup back taxes by going after any property that is under your name.
Learning About California Tax Liens
The California Franchise Tax Board will attach a lien to any property you have rights to within the state if you have a tax bill stemming from unpaid or unfiled taxes. In California, property liens for unpaid taxes can cover the following:
- Vacant land.
- Mobile homes.
Unfortunately, a lien can damage your finances if you allow it to linger. While California liens are effective for 10 years before expiring, they may be extended if your tax bill still isn't paid in full. If there's a tax lien against you in California, you have every reason to want to take care of the problem as quickly as possible.
Read More: Difference Between Debt & Liabilities
How Do You Get a Tax Lien Removed in California?
First, make sure that a lien wasn't applied by error. There's a possibility that a clerical error is responsible if you're hearing about a lien even though you're confident you don't owe the state any back taxes. The California Franchise Tax Board will end your lien if it can be determined that it was applied in error after you contact them.
If the lien is a true lien, you have a few different approaches to take when trying to get it released. Here's a look:
- Pay the lien. The fastest way to get a lien released is to pay what you owe. That includes all penalties, interest and fees that have accumulated. Payments to the California Franchise Tax Board can be made by check, credit card, money order or bank transfer.
- File all missing tax returns. If your lien has been placed due to a missing tax return, your lien will be released if you file, pay your tax debt and cover all fees.
- Seek relief options. If you're unable to pay what you owe in a lump sum, the California Franchise Tax Board may allow you to settle your debt using a payment plan called a monthly installment agreement (IA). If you can prove financial hardship, you may be able to settle your tax debt at a reduced amount using something called an Offer in Compromise (OIC).
Read More: How to Request a Proof-of-Debt Letter
Checking for Lien Removal
Once you get a lien resolved using one of these methods, there's still one more task to take care of. Don't assume that your lien has been wiped clean from your record just because you've gotten word from the California Franchise Tax Board that it's gone. It's important to check with the county recorder, California Secretary of State's Office and credit bureaus to confirm that the lien has been removed. Of course, you should consider speaking with a California tax lien lawyer if you've received a lien notice.
Read More: How Can I See All of My Debt?
- State of California Franchise Tax Board: Help With Liens
- State of California Franchise Tax Board: Liens
- Internal Revenue Service. "Understanding a Federal Tax Lien." Accessed Sep. 18, 2020.
- Experian. "Tax Liens Are No Longer a Part of Credit Reports." Accessed Sept. 18, 2020.
- Experian. "What Affects Your Credit Scores?" Accessed Sep. 18, 2020.
- Federal Trade Commission. "Fair Credit Reporting Act 15 U.S.C § 1681," Page 22. Accessed Sep. 18, 2020.
Adam Luehrs is a writer during the day and a voracious reader at night. He focuses mostly on finance writing and has a passion for real estate, credit card deals, and investing.