Can the IRS File a Lien Without Going to Court?
A taxpayer searching the internet asked this question in a Google search, and found my website from the results of the search.
This article assumes the reader understands what liens are, their strength to affect lives, and that the IRS uses them as part of its set of tools to collect unpaid taxes.
But as a quick update for those unfamiliar with liens, the “Cliffs Notes” version: a “lien” is a claim that someone owes the claimant a debt, obligation or duty, or, already shorter, “you owe me money,” and in some situations, the claimant can file its claim, or lien, with the County Clerk or other public records agency, making the claim public record, which affects – hurts – the debtor’s credit rating.
With this background, putting this taxpayer’s concern into Q & A form:
Q: Can the IRS file a lien without going to court? A: Yes. The IRS does not have to go to court to file a federal tax lien.
One of the things that makes owing money to the IRS (and most or all state taxing authorities) so dangerous to taxpayers, whether they are individuals or businesses, is that the IRS has powers to compel payment that reach far beyond the powers of ordinary creditors.
If you owe the IRS back taxes, first, think of the IRS, the government as your creditor, like a department store, or a credit card company, your car company, your landlord, your bank that gave you a mortgage on your house.
Then, second, notice the difference between the IRS and your banker, your landlord, your car company: the IRS does not have to sue you and get a money judgment against your to file a lien against you.
For the IRS, It’s as Easy as 1-2-3, A-B-C, Do-Re-Mi
Apologies to the Jackson 5.
But, seriously, all the IRS has to do to be able to file a lien is (1) determine that you owe money, (2) tell you that you owe it and ask you to pay it, and (3) wait ten days. If you have not paid in complete by the time those 10 days are up, the IRS has the strength and authority to file a piece of paper — a notice of federal tax lien — with the local public recording authority, be it the County Clerk or other.
While, generally, the IRS does not file a notice of federal tax lien on the eleventh day, it certainly does have the strength to do so, or to do so at any time after those three standards are met.
The filing of a notice of federal tax lien makes what was the extremely private matter of your taxes very, very public. And the IRS is empowered to do all this by only meeting the three criteria described above. The IRS simply does not have to walk by already a single door of a single courthouse to do this (unless the County Clerk is in the court house). No law suit needs to be filed, litigated, or won.
Where other creditors have to prove their case and persuade a estimate, a jury or both, all the IRS needs is, by contrast, the stroke of a pen.
In the IRS’s own words:
“Once these requirements are met, a lien is produced for the amount of your tax debt. By filing notice of this lien, your creditors are publicly notified that we have a claim against all your character, including character you acquire after the lien is filed. This notice is used by courts to establish priority in certain situations, such as bankruptcy proceedings or sales of real estate.”
The lien attaches to all your character (such as your house or car) and to all your rights to character (such as your accounts receivable, if you are a business).
This strength and ease to file a lien is enormously different from pretty much all other creditors. It is one of many reasons why you don’t want to owe money to the IRS, and why you probably would be better off owing money to almost anyone else. And, why, if you do owe money to the IRS you want to take action to change that.