Posted On December 19, 2018

What Is a Blanket Lien?

A blanket lien is a tool that the IRS can use to encumber all of a delinquent taxpayer’s assets instead of encumbering a single asset for collateral. Nevadans who have blanket liens placed on their property may need to discharge them before they can sell or refinance their assets including real estate. When a taxpayer has failed to pay his or her tax debt and has not entered into an installment plan with the IRS, the agency may send a notice of tax lien. If the taxpayer does not act when he or she receives this notice, the IRS may then file a tax lien with the county recorder’s office in the county where the taxpayer resides. Unlike the liens that many other types of creditors can place on the property, an IRS tax lien encumbers all of the assets. 

Understanding IRS Blanket Liens

A blanket lien applies to all of the property and assets that are owned by a debtor. The IRS can place tax liens on the assets of debtors, and the liens will encumber all of the assets that the debtors own. While the IRS is unlikely to sell the property, the liens can make it difficult for the taxpayers to sell the assets to others. The liens serve as an encumbrance on the titles of the assets. If a taxpayer wishes to sell a piece of real estate, he or she will need to address the tax lien first.

Discharging Tax Liens

It is possible for taxpayers to discharge tax liens. They can pay the IRS what is owed to remove the liens. The IRS may also agree to discharge a lien on a single piece of property if the taxpayer owes more to a priority creditor than the property is worth. For example, if a person’s home is worth $200,000, and he or she also owes the mortgage lender $200,000, there is nothing for the tax lien to attach to in the home. In a scenario like that, the IRS may agree to discharge the tax lien. The agency may likewise agree to discharge the lien if the taxpayer negotiates an offer in compromise to pay less than he or she owes to satisfy the debt.