By Jon Call, EA: Enrolled Agent & NTPI Fellow • CLAW Tax Group
An IRS tax lien is the government’s legal claim against your property when a tax bill goes unpaid. The lien itself takes nothing. The trouble usually starts when the IRS files a public notice that lenders and other creditors can see, which can get in the way of a sale or a new loan.
Short answer: An IRS tax lien is the government’s legal claim against all your property after an assessed tax bill goes unpaid. The IRS releases it within 30 days after full payment. Before that, withdrawal removes the public Notice of Federal Tax Lien, discharge takes the lien off one property, and subordination lets a lender move ahead of the IRS. CLAW Tax Group’s Enrolled Agents can help with all four.
What is an IRS tax lien?
The lien arises by law after the IRS assesses the tax, sends you a bill, and the bill goes unpaid. It attaches to everything you own, such as property, securities, and vehicles, and to assets you acquire while the lien lasts.
A lien is not a levy. The lien is a claim against your property. A levy actually takes it. If a levy has already hit, see IRS levy release for bank accounts or IRS wage garnishment release for paychecks.
How does a tax lien affect me?
IRS guidelines generally call for a public Notice of Federal Tax Lien once the unpaid balance reaches $10,000. The notice no longer appears on major credit reports, but the IRS says it may still affect your ability to get credit. Because it is public, it can come up when you sell or refinance.
The IRS must send you Letter 3172 within 5 business days after it files the notice. You then have 30 days after that 5 day period to request a Collection Due Process hearing. The letter shows the exact last day.
How do we fix a tax lien?
- Release. The IRS must release the lien within 30 days after the debt is fully paid or can no longer be collected. The notice shows an old balance, so get a payoff amount from the IRS before you send money. A release clears both the lien and the public notice.
- Withdrawal. A withdrawal takes down the public notice and tells creditors the IRS is not competing with them for your property. You still owe the balance.
- Withdrawal with a payment plan. If you owe $25,000 or less, or pay the balance down to that amount, a Direct Debit installment agreement can qualify you for a withdrawal after three consecutive direct debit payments, if you meet the other IRS rules. The plan must pay the balance in full within 60 months or before the collection statute ends, whichever is earlier.
- Selling or refinancing. A discharge removes the lien from one property, such as a home you are selling. A subordination leaves the lien in place but lets a lender move ahead of the IRS, which may make a refinance possible. Apply at least 45 days before the transaction date.
- Other resolutions. Under an installment agreement, the lien stays until the balance is paid. With an accepted Offer in Compromise, the IRS releases it once you meet the payment terms. In Currently Not Collectible status, the IRS may still file a lien notice.
In an IRS example, a property with a $203,000 lien sells for $215,000. After $135,000 of debts ahead of the IRS and $15,000 of settlement costs, the IRS interest is $65,000. Once the IRS receives that amount, it can discharge the property.
Does a tax lien go away on its own?
Usually, yes. The IRS generally has 10 years from assessment to collect. If that period was not extended and the IRS does not refile the notice, the lien usually releases automatically. The date to watch is the Last Day for Refiling on your lien notice. To find your dates, see our page on the IRS collection statute (CSED).
How CLAW Tax Group helps
Our team of Enrolled Agents handles your lien case from start to finish. We pull your IRS records, get the payoff, check your deadlines, and file the request that fits your sale, refinance, or budget. When your matter needs an attorney, we work with Matthew Wildes, JD, CPA, of Wildes At Law.
Call or text: (651) 323-2255
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You may also want to read tax lien vs tax levy, or see all tax relief services.
CLAW Tax Group is a tax resolution firm based in White Bear Lake, Minnesota, serving clients in all 50 states. Affiliated with Wildes At Law.
References: IRC 6320, 6321, 6322, 6323(j), 6325, and 6502; Publication 594; Publication 783; Publication 784; Publication 1450; Publication 1468; Publication 1660; IRS Understanding a federal tax lien; Topic 201; Topic 202.
Frequently asked questions
Does a federal tax lien show up on my credit report?
Not on major credit reports, the IRS says, but the filing may still affect your ability to get credit. The notice is a public record filed to alert creditors. Publication 594 says employers and landlords may not view it favorably. If the IRS withdraws the notice, you can ask in writing for the IRS to notify the credit reporting agencies, financial institutions, and creditors you name.
How soon does the IRS release a lien after I pay it off?
Within 30 days. The IRS must release a federal tax lien within 30 days after the liability is fully paid. When you pay by personal check, that 30 day period starts 15 calendar days after the IRS receives the check. For an urgent release, you can visit a local IRS office. Pay any balance there with guaranteed funds, such as a cashier’s check or money order, and the certificate can be issued right away. If there is no release 30 days after payoff, request one in writing under Publication 1450.
What is IRS Letter 3172?
Letter 3172 is a deadline notice. It is the Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320. The IRS must send it within 5 business days after it files the lien notice, and you have 30 days after that 5 day period to request a Collection Due Process hearing on Form 12153. The letter shows the exact last day. In the hearing you can raise collection alternatives, withdrawal, discharge, subordination, and hardship.
Can I get a tax lien withdrawn while I am on a payment plan?
Yes, if you meet the IRS rules for a Direct Debit installment agreement. IRS.gov lists these general rules. You are an individual, a business with income tax only, or an out of business entity. You owe $25,000 or less, or pay the balance down to that amount. The plan pays in full within 60 months or before the collection statute ends, whichever is earlier. You comply with other filing and payment rules. You have made three consecutive direct debit payments, and you have no default on a Direct Debit agreement. You apply on Form 12277.
What is the difference between a lien release and a lien withdrawal?
A release means the debt is resolved. A withdrawal means the public notice comes down. A release clears both the lien and the public Notice of Federal Tax Lien after the balance is paid or can no longer be collected. A withdrawal treats the notice as if it had not been filed, but you still owe the balance. You can also ask for a withdrawal after a release. Your returns for the past three years must be filed, and your estimated payments and deposits must be current.
Can I sell my house if the IRS has a lien on it?
You can ask the IRS for a Certificate of Discharge. The certificate removes the lien from the property named in it. A common case is a sale where the government receives its interest through the sale proceeds. Apply on Form 14135 with Publication 783 at least 45 days before the transaction date. The IRS sets the amount it needs from the sale based on the value of its interest after debts that rank ahead of it.
Can I refinance my mortgage with an IRS tax lien?
A Certificate of Subordination is the IRS tool for a refinance. Subordination does not remove the lien. It lets a named lender move ahead of the IRS on the property, which may make the new loan possible. Apply on Form 14134 with Publication 784 at least 45 days before the transaction date. A subordination under IRC 6325(d)(1) requires a payment that the IRS sets after its review. One under IRC 6325(d)(2) does not require a payment.
Does the IRS file a tax lien for every unpaid balance?
Not always. The lien and the public notice are two separate steps. The lien arises by law once the IRS assesses the tax, demands payment, and you do not pay in full. Filing the notice is a separate decision. The Internal Revenue Manual tells IRS collection employees to generally file a notice when the total unpaid assessed balance is $10,000 or more, and generally not below $10,000 unless filing protects the government’s interest. A payment plan outside the simple plans, or Currently Not Collectible status, can also lead to a filing.
When does a federal tax lien release on its own?
A federal tax lien usually releases automatically 10 years after the tax is assessed, if the collection period was not extended and the IRS did not refile the notice. The date to check is the Last Day for Refiling on the notice. Once that date passes without a refiling, the notice itself works as the release, and the IRS does not automatically send a separate certificate. Each liability on the notice has its own release point. A release that happened by mistake while the collection period was still open can be revoked.
Do I need a tax attorney for an IRS tax lien?
Usually not for administrative lien work. Attorneys, CPAs, and Enrolled Agents have unlimited representation rights before the IRS, including payment and collection issues and appeals. Jon Call, EA and CLAW Tax Group’s Enrolled Agents can handle release requests, Form 12277 withdrawals, discharge and subordination applications, and lien hearings under Form 2848. Matthew Wildes, JD, CPA handles attorney work, such as a Tax Court petition after a Collection Due Process determination or litigation, through Wildes At Law.
