Federal law generally keeps your tax records private, but fall behind and a tax debt can become public record. A tax lien is the government’s claim against your assets and property.
The federal government alerts creditors of its interest through the Notice of Federal Tax Lien, which is a public document. In this post, we look at a couple reasons you might want to seek a lien release before starting a job search.
Delinquent debt and security clearance
If you are seeking a job in certain fields that involve security clearance, a tax lien may be considered a risk. Certain government agencies may also be able to access more of your tax history than what is contained in the public record.
Employers more often run online searches on prospective employees. In a tight labor market, something like a tax lien can help an employer decide against hiring you when you are up against other equally qualified candidates. When it is time to look for a new position, you do not want to let problems with the IRS be a deciding factor.
Two lien release options
Paying the tax debt is the preferred method listed on the IRS website to release a tax lien. But when you are between jobs this may not be possible.
Withdrawal may provide an option to remove the public Notice of Federal Tax Lien without paying the full balance due. Form 12277 lists several of the reasons that might support a withdrawal:
- Federal lien procedure was not followed
- You have entered an installment agreement with a direct debit
- Withdrawal will help with tax collection (i.e. allow you to get a job and pay the tax obligations)
Speaking to a tax attorney is another way to develop a strategy to resolve tax problems.