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CAN I USE AN IRS INSTALLMENT AGREEMENT TO PREVENT OR REMOVE AN IRS LIEN NOTICE RECORDING?

Posted by Michael S. Anderson | Sep 30, 2021 | 0 Comments

WHAT IS AN IRS INSTALLMENT AGREEMENT?

Most individuals with IRS debt will qualify to make payments on the IRS debt over time.  The IRS calls these arrangement installment agreements.   These installment agreements can be based on time or they can be based on the taxpayer's financial situation. (Learn more here)  

WHAT IS AN IRS LIEN NOTICE?

When a taxpayer owes the IRS a debt, the IRS has a lien, or a claim against the taxpayer's assets automatically.  The IRS doesn't have to sue the taxpayer, obtain a judgement and record that judgement, as other creditors do in order for that lien to exist. 

However, the lien that comes "into being" once the debt exists is a "secret".  No one knows about it other than the IRS and the taxpayer.  As a result, the IRS' interest in assets the taxpayer may own isn't protected as to the taxpayer's other creditors.

In order to protect it's interest, the IRS will record what is called a "Notice of Federal Tax Lien" in the county where the taxpayer lives or has assets.   

When it does this, other creditors are on notice that the IRS has "first dibs" as to the taxpayers assets.  

CAN THE IRS INSTALLMENT AGREEMENT PREVENT AN IRS LIEN NOTICE RECORDING?

$50,000.00 ASSESSED BALANCE AND NO LIEN NOTICE YET FILED

If the "compliant" taxpayer owes an assessed balance of $50,000.00 or less, that taxpayer can arrange an auto-debited "streamlined" installment agreement that pays the debt over 72 months or within the time period remaining on the IRS' collection statute, whichever is shorter.

The assessed balance is the amount of the debt on the date the IRS originally place the debt "on the books" and added the initial portions of penalty and interest.   This aids the taxpayer in that even if the debt has grown much larger than $50,000.00, the assessed balance may be low enough that the taxpayer can make a payment to get that assessed balance to $50,000.00 and then pay the total balance according to the streamlined payment terms. 

In essence, a taxpayer with much more than $50,000.00 in total debt can often qualify for a streamlined agreement without needing to pay the total balance to $50,000.00.

As a result of this arrangement, the IRS should agree not to record the notice of federal tax lien for the years owed.

Many taxpayers tend to have one of two problems in setting this type of arrangement up.   

The first is that the debt is often just large enough that the taxpayer can't pay the the amount necessary to get the balance to the necessary $50,000.00 assessed amount.

The second, the taxpayer can't afford the payment amount monthly and is forced to use an "ability to pay arrangement" or non-collectible status arrangement.  Both result in lien notice filings.

CAN THE IRS INSTALLMENT AGREEMENT REMOVE AN IRS RECORDED LIEN NOTICE?

$25,000.00 ASSESSED BALANCE AND LIEN NOTICE ALREADY FILED

If the "compliant" taxpayer owes an assessed balance of $25,000.00 or less, that taxpayer can arrange an auto-debited "streamlined" installment agreement that pays the debt over time.

As a result of this arrangement, the IRS should agree, after 3 payments are auto-debited, to "withdraw" the lien notice, 

About the Author

Michael S. Anderson

Michael Anderson has been representing Arizona clients with tax debt problems for two decades and has helped his clients eliminate millions of dollars in tax debt. His tax debt practice is limited to helping individuals and the self-employed who have serious IRS problems.

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