What Is a Federal Tax Lien, and How Do You Get Rid of One?
Short answer
A federal tax lien is the government's legal claim against all your property when you don't pay a tax debt after the IRS bills you. The IRS releases the lien within 30 days after the debt is paid in full. In some cases you can also have the public notice withdrawn, including when you owe $25,000 or less and are on a qualifying direct debit payment plan.
How a lien arises
A lien exists after the IRS assesses the tax, sends you a bill (a notice and demand for payment), and the debt goes unpaid. The IRS may then file a public Notice of Federal Tax Lien to alert creditors that it has a legal right to your property.
How a lien affects you and your business
- It attaches to all your assets, including property acquired later.
- For a business, it attaches to business property and rights to it, including accounts receivable.
- A filed notice can limit your ability to get credit.
Lien vs. levy
A lien is a claim; a levy is a seizure. If a debt stays unresolved, the IRS can move from a lien to a levy on bank accounts or wages. If that's already happening, see how to stop an IRS wage garnishment.
Ways to get rid of or limit a lien
- Pay in full: the IRS releases the lien within 30 days after the debt is paid.
- Withdrawal: removes the public notice (you still owe the tax). One route may be available if you owe $25,000 or less and are on a direct debit installment agreement that pays the balance within 60 months (or before the collection statute expires, if sooner), after three consecutive payments, among other conditions. Another may be available after the lien is released if you're current on filing for the past three years and on estimated payments and deposits.
- Discharge: removes the lien from a specific property, which can help with a sale.
- Subordination: lets another creditor move ahead of the IRS, which can help with refinancing.
Resolving the underlying debt
Most lien problems are solved by resolving the balance: an installment agreement, an offer in compromise, or another tax resolution option.
Dealing with a tax lien?
We represent clients before the IRS and can map out the fastest route to release or withdrawal.
Frequently asked questions
How do I get a federal tax lien removed?
Paying the debt in full is the most direct way; the IRS releases the lien within 30 days after payment. You may also qualify to have the public Notice of Federal Tax Lien withdrawn under certain conditions.
Is a tax lien the same as a levy?
No. A lien secures the government's claim against your property. A levy actually takes property, such as money in a bank account, to pay the debt.
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