A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The IRS People First Initiative has suspended many IRS collection actions including liens; however, taxpayers still need to be concerned.

Federal Tax Lien ReliefFederal tax liens are subject to different rules than other types of debts. The IRS doesn’t need to actually file a lien. If a tax isn’t paid after a formal request, the Internal Revenue Code grants the IRS an automatic lien against all of a taxpayer’s property and rights to the property. This differentiates the IRS from other creditors who need to get a judgment in order to forcibly collect monies due. The IRS’ “silent lien” even attaches to property acquired after the assessment itself. However, the IRS files a Notice of Federal Tax Lien in order to establish collection priority.

Under the IRS People First Initiative, while collections are suspended at the moment, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted. For example, where there are “exigent circumstances” the IRS could still pursue collection actions. Exigent circumstances include “the loss of opportunity for the government to collect the taxes due, such as the expiration of the statute of limitations, assets that the taxpayers place beyond the reach of the government, etc.” Notably, bankruptcy is generally not an exigent circumstance. Where expiration of the statute of limitations might jeopardize IRS interests, it will issue Notices of Deficiency unless taxpayers’ consent to statute extension.

For taxpayers who need a lien release, certificate of discharge, or have another lien issue, the IRS is processing all electronically submitted lien certificate applications normally, and assigning them within 10 days. However, the IRS is not currently processing lien certificate applications mailed to the Advisory Consolidated Receipts (ACR) site in Florence, Kentucky. The IRS requests that taxpayers use the E-Fax line for the ACR site for certificates such as: discharge of property from the federal tax lien; withdrawal of the notice of federal tax lien; and subordination of the federal tax lien. Publication 4235, Collection Advisory Group Numbers and Addresses (PDF), has additional information on the process for submitting applications for lien certificates, and on related topics. For more information, taxpayers can visit these pages: https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue https://www.irs.gov/businesses/small-businesses-self-employed/understanding-a-federal-tax-lien

If you owe back taxes, the best thing to do is to contact an attorney as soon as possible to advise regarding options for resolving your tax issue. There are various options available including possibly negotiating (or renegotiating) an Offer-in-Compromise or Installment Agreement, particularly if you have been affected by COVID-19.