Tens of thousands of Americans have government security clearances. Whether you are a federal employee or private contractor, keeping your security clearance is key to staying employed. Having an IRS tax lien presents a real roadblock to maintaining or getting a clearance.
Security clearances are currently reviewed on average every five years. After the recent disclosures about apparent lax security reviews of Edward Snowden and Navy Yard shooting suspect Aaron Alexis, many expect that security reviews will soon be enhanced. That spells real trouble for those with tax problems.
A recent review of Defense Department security clearance appeals reveals that half of clearance denials involve financial considerations. And an IRS tax lien can be a one way ticket to the unemployment line.
The government considers financial problems to be a temptation to commit illegal acts in order to obtain funds to pay off one’s debts. Many Americans who betrayed their country did so for financial gain or greed. Having a payment plan for taxes probably doesn’t mean the loss of a clearance but an IRS tax lien does.
Not only are serious debts a temptation for trouble, the government also believes that those who are sloppy with their finances may also be sloppy with classified information.
So what happens if you can’t pay your taxes timely?
How To Avoid Liens
First, always file your returns even if you can’t pay them. Unfiled tax returns compounds the problem and increases your tax bill too. Even if you can’t pay, timely filing eliminates failure to file penalties.
Second, see if you can borrow the money. We have talked to people that said had they known a tax lien would have ended their career they would have somehow raised the money.
The IRS recently raised the threshold for filing liens from $5000 to $10,000 but don’t rely on that. The IRS can still file liens for lesser amounts and will sometimes do so if they believe someone is leaving the country. YOU may be leaving the country on orders from Uncle Sam but don’t expect the IRS to know that.
IRS Tax Lien Release vs Withdrawal
If you get a lien, simply paying the amount due doesn’t remove the lien. There is a huge difference for security clearance purposes between a lien withdrawal and a lien release. A release, while helpful, still stays on your record and shows you had serious financial payments.
If you owe back taxes and don’t yet have an IRS lien, make sure you resolve the lien issue before entering into a payment plan. Generally the IRS is pretty good about not filing liens if you can make regular payments and they understand that you will lose your job (and your ability to pay) if a lien is filed. Make sure you document everything in writing.
If you have done everything you could but still find yourself with an IRS tax lien, don’t give up. Hire an experienced tax lawyer instead. The time to file an appeal is very limited, however, so once you receive a lien notice, don’t delay.
The takeaway from this post is that lien releases don’t function the same way as a lien withdrawal. If you have tax problems, be very careful when dealing with the IRS or hire an IRS attorney to assist you.
The tax lawyers at Mahany & Ertl can help with lien withdrawals. Usually our services can be handled for a flat fee. For more information, contact attorney Bethany Canfield at or by telephone at (414) 223-0464. The author can also be contacted at or by telephone at (414) 704-6731. All inquiries are protected by the attorney – client privilege and kept in strict confidence.
Post by Brian Mahany, Esq.