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Liens give the IRS a legal claim to your property as security or payment for your tax debt. A Notice of Federal Government Tax Lien may be filed only after:
- IRS assesses the liability;
- IRS send you a Notice and Demand for Payment – a bill that tells you how much you owe in taxes; and
- You neglect or refuse to fully pay the debt within 10 days after we notify you about it.
Once these requirements are met, a lien is created for the amount of your tax debt. By filing a notice of this lien, your creditors are publicly notified that we have a claim against all your property, including property you acquire after the lien is filed. This notice is used by courts to establish priority in certain situations, such as bankruptcy proceedings or sales of real estate. The lien attaches to all your property (such as your house or car) and to all your rights to property (such as your accounts receivable if you are a business). Caution!
Once a lien is filed, your credit rating may be harmed. You may not be able to get a loan to buy a house or a car, get a new credit card, or sign a lease. Therefore it is important that you work to resolve your tax liability as quickly as possible before lien filing becomes necessary.
Releasing a Government Tax Lien
We will issue a Release of the Notice of Federal Government Tax Lien:
- Within 30 days after you satisfy the tax due (including interest and other additions) by paying the debt or by having it adjusted, or
- Within 30 days after we accept a bond that you submit, guaranteeing payment of the debt.
In addition, you must pay all fees that a state or other jurisdiction charges to file and release the lien. These fees will be added to the amount you owe. Refer to Publication 1450, Request for Release of Federal Tax Lien. Usually, 10 years after a tax is assessed, a lien releases automatically if we have not filed it again. If the IRS knowingly or negligently do not release a Notice of Federal Tax Lien when it should be released, you may sue the federal government, but not IRS employees, for damages. Payoff Amount
The full amount of your lien will remain a matter of public record until it is paid in full. However, at any time, you may request an updated lien payoff amount to show the remaining balance due. An IRS employee (either over the toll-free customer service telephone line, or at a walk-in service site, or at your local IRS’ lien desk) can issue you a letter with the current amount due in order to release a lien.
Applying for a Discharge of a Federal Government Tax Lien
If you are giving up ownership of property, such as when you sell your home, you may apply for a Certificate of Discharge. Each application for a discharge of a tax lien releases the effects of the lien against one piece of property. Note that when certain conditions exist, a third party may also request a Certificate of Discharge. If you’re selling your primary residence, you may apply for a taxpayer relocation expense allowance. Certain conditions and limitations apply. Refer to Instructions on How to Apply for a Certificate of Discharge of Property from the Federal Tax Lien. Making the IRS Lien Secondary to Another Lien
In some cases, a federal tax lien can be made secondary to another lien. That process is called subordination. Refer to How to Prepare Application for Certificate of Subordination of Federal Tax Lien. Withdrawing Government Tax Liens
By law, a filed notice of tax lien can be withdrawn if:
- The notice was filed too soon or not according to IRS procedures,
- You entered into an installment agreement to pay the debt on the notice of lien (unless the agreement provides otherwise),
- Withdrawal will speed collecting the tax, or
- Withdrawal would be in your best interest (as determined by the Taxpayer Advocate), and in the best interest of the government.
- We will give you a copy of the withdrawal, and if you write to us, we will send a copy to other institutions you name.
Appealing the Filing of a Lien
The law requires us to notify you in writing not more than 5 business days after the filing of a lien. We may give you this notice in person, leave it at your home or your usual place of business, or send it by certified or registered mail to your last known address. You may ask an IRS manager to review your case, and you may request a Collection Due Process hearing with the Office of Appeals by filing a request for a hearing with the office listed on your notice. You must file your request by the date shown on your notice. Some of the issues you may discuss include:
- You paid all you owed before we filed the lien,
- We assessed the tax and filed the lien when you were in bankruptcy, and subject to the automatic stay during bankruptcy,
- We made a procedural error in an assessment,
- The time to collect the tax (called the statute of limitations) expired before we filed the lien,
- You did not have an opportunity to dispute the assessed liability,
- You wish to discuss the collection options, or
- You wish to make spousal defenses.
At the conclusion of your Collection Due Process hearing, the IRS Office of Appeals will issue a determination. That determination may support the continued existence of the filed federal tax lien or it may determine that the lien should be released or withdrawn. If you disagree with Appeal’s determination, there is a 30-day period starting with the date of determination, in which you may request judicial review in a court of proper jurisdiction. Refer to Publication 1660, Collection Appeal Rights, for more information.If You Found The Information Here Was Useful Please Consider Sharing This Page!