Silent Automatic Lien – Definition

Cite this article as:"Silent Automatic Lien – Definition," in The Business Professor, updated October 10, 2019, last accessed August 10, 2020, https://thebusinessprofessor.com/lesson/silent-automatic-lien-definition/.

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Silent Automatic Lien Definition

A silent automatic lien refers to a type of lien that the Internal Revenue Service (IRS) does not put in any public record. The IRS does not file such liens using the notice of federal tax lien (NTFL). Silent automatic lien are also not known to third parties or made public. Being liens that do not enter any public record, silent automatic liens serve specific purpose for the IRS. Such liens are used to collect unpaid taxes from delinquent borrowers after other attempts to collect the taxes have failed.

A Little More on What is a Silent Automatic Lien

There are two types of liens, one is a federal tax lien which appear in public record while the other is a silent automatic lien that is not recorded publicly. Generally, federal tax liens are used to collect unpaid taxes from taxpayers, this applies to different types of taxes. Silent automatic liens on the other hand are liens used by the internal revenue service when other attempts to collect unpaid taxes from a delinquent taxpayer have failed.

Federal tax liens can be used to collect unpaid taxes including gaft taxes, income taxes, self-employment taxes and estate taxes. Taxpayers who have federal tax liens on their properties will have negative creditworthiness that makes it impossible for them to secure funds or loans.

How to Eradicate a Silent Automatic Lien

Taxpayers who have silent automatic leins acn have the liens removed through the following ways;

  • Declaring Bankruptcy: When a taxpayer declares bankruptcy, it means that such a taxpayer if financially incapable to pay the taxes owed.
  • Payment of unpaid taxes or taxes owed: This is by paying all the taxes owed to the IRS.
  • Negotiating with the IRS: This is also called an offer in compromise, it allows delinquent taxpayers to pay lower than the amount of taxes they owe. This will allow taxpayers settle their owed taxes for little amount.
  • Waiting for time limit for collections to pass.

There are ways the Internal Revenue Service can collect unpaid taxes from taxpayers, one of the ways is to seize the assets of a taxpayer. The investment accounts, properties, automobiles and bank accounts that a taxpayer owes are assets that the IRS can seize so that the government that collect the unpaid taxes. The government uses liens to collect an unpaid debt from a taxpayer. A lien is not the same as a levy which is the legal seizure of the property or assets of taxpayer. Also, another distinction between a lien and a levy is that the IRS can levy the assets or property of an individual for tax payment purpose while a lien is placed on the assets and properties of a delinquent taxpayer who has taxes owed.

References for “Silent Automatic Lien

https://www.investopedia.com › Taxes › Income Tax

https://www.irs.gov/irm/part5/irm_05-017-002

https://www.forbes.com/sites/…/dionne-warwick-proves-irs-tax-liens-can-be-wrong/

taxattorneydaily.com/tax-information/irs-enforced-collection/

thetaxlawyer.com/tax-collections/information/tax-liens-levies-q-a

https://tax-guard.com/blog/how-silent-tax-liens-can-hurt-lenders/

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