The reading level for this article is All Levels

 The IRS announced changes to the tax lien process for people struggling with tax liabilities.

According to, a tax lien is a lien imposed by law upon a property to secure the payment of taxes.  A tax lien may be imposed for delinquent taxes owed on real property or personal property, or as a result of failure to pay income taxes or other taxes.”
Liens can affect a taxpayers credit rating so it is important for taxpayers to make arrangements to pay their taxes as soon as a lien is filed.
The IRS has created new programs to help struggling taxpayers pay back taxes and avoid tax liens.  The program is available to help small businesses and individuals meet tax obligations.
“We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start,” IRS Commissioner Doug Shulman said. “These steps are good for people facing tough times, and they reflect a responsible approach for the tax system.”
Changes to the Lien filing system are:

  • The IRS will be increasing the dollar threshold for when liens are issued on taxpayer past due balances.  This will result in fewer tax liens and IRS legal claims on unpaid tax debt.
  • The IRS is streamlining its internal procedures so it will be easier for a taxpayer to obtain lien withdrawals once a tax bill is paid.
  • Taxpayers with liens of $25,000 or less will be able to withdrawal liens when a direct debit installment agreement is in place. Lien withdrawals will be after a probationary period to ensure direct debits are honored.
  • Small businesses with $25,000 or less in unpaid taxes will be able to take advantage of installment agreements.  This is up from the prior limit of $10,000.  These agreements must be paid within 24 months and the small businesses will be required to enroll in the Direct Debit Installment Agreement.  
  • Taxpayers with income under $100,000 will be able to take advantage of the Offer- in-Compromise program.  This program is an agreement between the IRS and a taxpayer that settles unpaid taxes for a less amount if the IRS believes the taxpayer is unable to pay the full tax amount.  OIC are typically not accepted by the IRS if the IRS believes the taxpayer has the ability to pay the taxes.

“These steps are in the best interest of both taxpayers and the tax system,” Shulman said. “People will have a better chance to stay current on their taxes and keep their financial house in order. We all benefit if that happens.”
This is great news for many small businesses and taxpayers who are struggling to pay down tax debt.  More information on this program can be found at

This Business article was written by Patricia Lotich on 3/19/2011

Patricia Lotich is an MBA who is passionate about helping small business owners see their vision come to life by creating infrastructures that support business development and growth through strategic customer focus. She writes for The Thriving Small Business, which provides small business performance consulting services.