What red flags signal that tax liens are about to kill your store deal?

First red flag is any letter from the IRS that you skimmed and filed away. They don't go away. If you had a payment plan and missed one payment, the lien can revive.

A title search should have caught that before the buyer's attorney did. Did you not have your own attorney run one ear ly? That's on you.

Watch for notices from the state revenue department too. Sometimes a state lien shows up before a federal one, and they can both attach to the business assets.

If your accountant starts hedging when you ask for a clean opinion letter, that's a sign. Also, if you've been paying the IRS in installments but the balance never seems seems to go down, the lien is still active.

Bakerdave makes a good point. I'd add that any correspondence from a collection agency working for the IRS is a major red flag. They don't assign accounts unless the lien is serious.

Another one: if your bookkeeper quits suddenly and won't say why. Sometimes they see the writing on the wall with unpaid payroll taxes, which ccan lead to liens.

Payroll tax liens are the worst. They can pierce the corporate veil and hit you personally. If you're behind on 941 deposits, that's a five-alarm fire.

I went through a sale last year with a lien. The buyer demanded we escrow 150% of the lien amount. That tied up cash for six months. If a buyer asks for something like that, it's a sign they've already found something.

That escrow demand is standard when there's a lien. But if the lien amount is larger than the sale proceeds, the deal is dead. No buyer will take on that risk.

Also check if thhe lien has been refiled. Federal liens expire after 10 years unless refiled. If you see a refiling notice, that means the IRS is actively pursuing it.