What If There Is a Tax Lien on My Business?

by Denise Caldwell ; Updated July 27, 2017

Taxpayers who owe the IRS a business or individual debt are subject to the IRS's placing a lien on their assets. A lien is one of many tools used by the IRS collections department to enforce payment of taxes owed.

Significance

A lien is a security interest placed against a taxpayer’s assets. These assets include homes, cars, and businesses.

Removal

The lien will remain on the asset, in this case the business, until the lien amount is paid in full, or until the IRS accepts bond for payment of tax.

Considerations

Before the IRS places a lien a taxpayer’s business, it is required to send the owner a demand letter. You have 10 days from the date of the demand letter to pay the balance in full or make payment arrangements.

Warning

A levy, unlike a lien, is an actual seizure of taxpayer property to pay off tax debt. Taxpayers who do not work to pay off the lien risk having their assets levied.

Exemption

Taxpayers who are experiencing economic hardship, such as foreclosure, eviction, incarceration, and unemployment, should contact the taxpayer advocate to request that the lien not be enforced until such time as the taxpayer has the ability to pay.

About the Author

Denise Caldwell is a finance writer who has been writing on taxation and finance since 2006. Her articles appear regularly on websites such as Gomestic.com and MoneyNing.com. She has taken what she learned while working at the IRS to provide readers with helpful tax and finance tips. Caldwell received a Bachelor of Arts in political science from Howard University.

Photo Credits

  • Jupiterimages/Brand X Pictures/Getty Images