Notice of Federal Tax Lien Can Affect Your Job

Posted on February 19, 2014

A management consultant had unpaid 1040 liability due to the IRS. Wanting to make right with the IRS, he petitioned and was granted an installment agreement. In addition to granting the installment agreement, the IRS also filed a Notice of Federal Tax Lien on the taxpayer.

The management consultant asked the IRS to withdraw the Federal Tax Lien, contending that public notice of the Federal Tax Lien would cause him to be fired from his job and to become permanently unemployable. The taxpayer also provided a copy of his employer’s employee handbook which stated that his personal conduct away from work can affect his employ-ability if it has the potential to cast an adverse light on the employer.

The taxpayer filed suit in the United States Tax Court seeking the withdrawal of the Federal Tax Lien.

The Tax Court held for the IRS and stated that the filing of the Notice of Federal Tax Lien was necessary to protect the government’s interest. The IRS can but is not required to withdraw a Federal Tax Lien. The court held that the IRS reasonably determined that it was appropriate to not withdraw the Federal Tax Lien in order to allow collection of the taxpayer’s liability in the event that he acquired additional assets or defaulted the installment agreement.

Has the IRS filed a Notice of Federal Tax Lien against you? Are you worried that you may lose your job as a result? Call us, we can help.