When businesses get behind on their tax payments, the IRS and state can put a tax lien on the company. Your personal finances may be impacted, depending on how your business is structured. That’s why it’s vital to resolve business tax liens as quickly as possible, especially when you want to sell your business. 


The IRS might grant approval for you to sell your business if you can use the proceeds to pay your debt. However, lenders aren’t usually too eager to make loans to buyers when there’s a lien in place.

Check out this article: Tax Resolution for Business: Planning the Offer-In-Compromise (OIC)


Reasons Why Businesses Don’t Pay Taxes

Sometimes, business owners simply fall behind on their taxes because they have experienced a significant drop in revenue or miscalculated how much they were expected to pay.


In other cases, though, business owners willfully fail to pay tax or file false tax returns. These businesses face much worse penalties than just having a tax lien placed on their business.

What Does Willful Mean?

A willful failure to file tax returns means that you, as a business owner, knowingly decided not to file your tax returns. A willful failure to pay tax is a federal offense and can result in harsh penalties, including steep fees and even potentially jail time, according to IRS Sec 7203.

What Do Fraud and False Statements Mean?

If you have been accused of filing a fraud or false tax return, it means the IRS believes that you have knowingly misreported your income. The penalties for fraudulent statements can range from paying 20 to 75 percent of the tax underpayment. 

Related Article: IRS Secrets About Criminal Tax Investigations

How to Remove Your Business Tax Lien

The fastest and easiest way to remove your tax lien is to pay it in full. The IRS will release your lien 30 days after the debt has been paid. If you can’t pay your tax debt, then you have a few options.


First, you may qualify for a federal discharge or subordination. A discharge removes the lien from the property, and a subordination allows other creditors to act, which can make it possible to get a loan.


The other option is to have your business tax lien withdrawn. If you do the following, you may be able to have your tax lien withdrawn:

  • Pay your tax liability
  • Be current on your estimated taxes and tax deposits
  • Demonstrate up-to-date filings for the past three years

You can also have your lien withdrawn before paying your debt in some circumstances, such as the following:

  • Your business owes less than $25,000 in tax liability
  • You have an IRS installment loan that includes direct debit payments and a 60-month term 
  • You have made three consecutive direct payments toward your debt
  • You have no previous history of defaulting on other IRS direct installment agreements

In these cases, you will still eventually need to pay the debt. However, the lien will be removed, which can make it significantly easier to sell your business. You might be able to set up an IRS installment agreement for payroll taxes, which means you will pay a certain amount to the IRS every time you collect payroll.

No matter what your reason is for getting a tax lien, you must act quickly to get it resolved. Contact us today to talk to a member of our tax law team who can guide you through the process of resolving your tax lien.