Can I Work Out a Payment Plan for a Tax Lien?

The Internal Revenue Service collects tax debt from taxpayers on behalf of the federal government. The agency may place a tax lien against you if you fail to pay a tax debt. A paid tax lien can appear on your credit report for seven years. An unpaid tax lien can remain there indefinitely. Fortunately, the IRS can assist you with paying an overdue tax bill.

Federal Payment Plans

The IRS has four options for taxpayers with delinquent tax bills. An installment agreement permits you to pay off the balance in monthly installments; you must pay the minimum monthly payment each month to avoid default. A fresh start withdrawal requires you to pay off the debt in monthly installments, but you must permit the IRS to directly debit your bank account for the payments; while you're paying the debt off, the IRS "withdraws" the tax lien, which means it no longer appears in public records or on your credit report. An offer in compromise permits you to offer the IRS a dollar amount that's less than the amount you owe as settlement of the debt. Which option is best for you will depend on your individual tax situation.


Each payment plan from the IRS has its own guidelines and application procedure. The IRS will want you to answer questions about your personal finances and your ability to pay. The plans also have guidelines that specify whether an individual taxpayer's situation qualifies for the plan or not. You can apply for a payment plan at or call the IRS directly and one of their representatives will speak with you about your options. You can also enlist the help of a tax attorney. Additionally, the Taxpayer Advocate Office, a division within the IRS, helps taxpayers understand and resolve their tax issues. Information about how to contact a tax advocate in your area can be found at

Other Taxes

The federal government isn't the only governmental body that can issue a tax lien. State, city and county governments can place a tax lien against you for an unpaid tax bill. Payment options for past due taxes vary. For example, Illinois offers taxpayers a payment installment plan. Payments are made monthly; the payment amount and the length of time given to pay the debt are based on how much the taxpayer owes. To find out about payment plans in your area, check with your state Department of Revenue or the local taxing authority.

Unpaid Taxes

Not paying your taxes can lead to other financial woes. If you have unpaid tax debt, the IRS can seize your assets to pay it off. It can seize money in your bank accounts, garnish a portion of your wages or keep your federal tax return. It can also seize and sell property that you own. Depending upon the dollar amount, the IRS may decide to pursue criminal charges against you. Plus, interest and penalties accrue on unpaid tax debt. The longer it takes you to pay it off, the more you will owe.