IRS Tax Liens

An IRS tax lien is a legal claim the government places on your property when you fail to pay a tax debt. It attaches to all your current and future assets – including real estate, vehicles, and financial accounts – and gives the IRS priority over other creditors.

Unlike a levy, which seizes property, a tax lien secures the government’s interest in your property as collateral until the debt is paid. Tax liens can indirectly affect your credit, complicate the sale of assets, and make it difficult to secure loans.

The IRS typically files a Notice of Federal Tax Lien, which becomes a public record and alerts creditors that the government has a legal right to your property. While a tax lien doesn’t immediately result in asset seizure, it can escalate if left unresolved; potentially leading to levies or legal enforcement actions.

An IRS tax lien certificate as commonly described doesn’t actually exist. What the IRS issues instead is a Certificate of Release of Federal Tax Lien, which officially confirms that a federal tax lien has been satisfied and removed. This should not be confused with local government tax lien certificates, which are sold to investors when property taxes go unpaid at the state or municipal level.

Local tax lien certificates represent a financial interest that can be purchased, allowing the investor to collect the unpaid taxes – plus interest – from the property owner. In contrast, an IRS tax lien is a federal legal claim against a taxpayer’s assets for unpaid federal taxes, and it is not sold or transferred. The IRS uses liens to secure its interest in a taxpayer’s property until the tax debt is fully paid or otherwise resolved.

The IRS files a Notice of Federal Tax Lien when a taxpayer fails to pay a tax debt after the IRS has assessed the liability and sent a demand for payment. If the taxpayer does not pay or make arrangements to settle the debt, the IRS may file the tax lien to secure its legal claim to the taxpayer’s current and future assets.

Typically, the IRS will issue several notices before filing the tax lien. The process begins with a Notice and Demand for Payment, followed by a warning if the debt remains unpaid. If no resolution is reached, the IRS may then file the tax lien with local or state authorities, making it a matter of public record. This action can affect your credit, hinder the sale or transfer of property, and give the IRS priority over other creditors in collecting the debt.

Yes, the IRS can place a tax lien on your home if you owe back taxes and fail to pay after receiving notices. Once the IRS assesses your tax debt and sends a Notice and Demand for Payment, and you don’t respond or resolve the debt, it may file a Notice of Federal Tax Lien. This lien applies to all your current and future assets—including your personal residence.

While a lien doesn’t mean the IRS will immediately seize your home, it secures their legal claim to the property. If you try to sell or refinance the home, the IRS lien must typically be paid off first, which can complicate or delay the transaction. The lien remains in place until the tax debt is paid in full, resolved through settlement, or becomes unenforceable due to the statute of limitations.

Tax liens used to appear directly on credit reports, negatively impacting credit scores. However, in 2018, major credit bureaus – Equifax, Experian, and TransUnion – stopped including most tax lien data. This means that tax liens generally no longer directly affect your credit score.

Despite this change, a tax lien can still significantly impact your ability to obtain loans, mortgages, or refinance. This is because lenders frequently check public records, where tax liens remain visible. Therefore, while your credit score might not be directly affected, your overall creditworthiness and access to credit can still be hindered.

Yes, IRS tax liens are public record. When the IRS files a Notice of Federal Tax Lien, it is recorded with local or state authorities to notify creditors that the government has a legal claim on your property due to unpaid tax debt.

These records are typically accessible through the county recorder’s office, clerk of court, or secretary of state’s office, depending on the jurisdiction where the taxpayer lives or owns property. In some cases, they may also be available online via third-party public records services.

Because the lien is public, lenders, employers, and other entities may become aware of it – potentially affecting your ability to secure financing, housing, or even certain job opportunities.

The IRS generally has 10 years from the date of tax assessment to collect on a tax lien. This means the IRS has a decade to pursue collection actions, and this time period is known as the Collection Statute Expiration Date (CSED). Once that period ends, the IRS’s right to collect the tax – and to enforce the lien – expires, and the tax lien is typically released.

However, certain actions can extend or suspend the 10-year period. For example, filing for bankruptcy, submitting an Offer in Compromise, or requesting a Collection Due Process (CDP) hearing can pause the clock. During that time, the IRS may still maintain the tax lien, and the collection window can be extended accordingly.

If the tax debt remains unpaid and the collection period hasn’t expired, the lien continues to apply to your current and future assets. Once the statute expires or the debt is resolved, the IRS should automatically release the lien, though you may need to request a Certificate of Release to formally clear public records.

A tax lien is a legal claim the IRS places on your assets as security for unpaid taxes. It’s like a placeholder, indicating the IRS has a right to your property if the debt isn’t settled. A tax levy, on the other hand, is the IRS’s actual seizure of your property or funds to satisfy the tax debt.

So, a tax lien secures the debt, while a tax levy collects it. A tax lien restricts your ability to sell or refinance assets, whereas a tax levy allows the IRS to take money directly from your bank accounts, wages, or seize property.

Yes, you can get rid of an IRS tax lien, but it typically involves resolving the underlying debt or qualifying for specific IRS programs. Here are the primary ways:

• Pay the Tax Debt in Full
  Paying your tax debt (including interest and penalties) in full prompts the IRS to release the lien within 30 days. You can then request a Certificate of Release of Federal Tax Lien to clear public records.
• Appeal the Lien
  If you believe the lien is incorrect or unjustified, you can request a Collection Due Process (CDP) hearing within 30 days of the lien notice. The IRS Office of Appeals may remove the tax lien or agree to alternative resolutions. If you’re outside the 30-day window, the Collection Appeals Program (CAP) offers another route, though it’s not appealable to Tax Court.
• Request a Lien Withdrawal
  In some cases, the IRS may withdraw the lien even if you haven’t fully paid the debt – for example if you’re in a Direct Debit Installment Agreement, or if withdrawal helps with collection or the lien was filed in error.
• Settle with an Offer in Compromise (OIC)
  If accepted, an OIC allows you to settle your tax debt for less than what you owe. Once paid, the tax lien is released.
• Let the Statute Expire
  The IRS has 10 years from the tax assessment date to collect. After that, the tax lien typically becomes unenforceable and should be released, unless the collection period was extended.

Removing an IRS tax lien improves your ability to sell property, apply for credit, and restore financial standing. Consulting an experienced tax attorney – like those at TaxLawyer.com – will help you understand your options and choose the most effective strategy for your specific situation.

Yes, an IRS tax lien can continue even if you file for bankruptcy. While filing for bankruptcy may discharge your personal obligation to pay certain tax debts, it does not automatically remove a federal tax lien that was filed before the bankruptcy.

Here’s how it works:

• Discharge vs. Lien: Bankruptcy may wipe out your personal liability for the tax debt, especially under Chapter 7 (bankruptcy code). However, if the IRS already recorded a tax lien on your property before you filed, that tax lien survives the bankruptcy and remains attached to any assets you owned at the time of filing; such as your home, car, or business equipment.
• Post-Bankruptcy Asset Sales: Even after discharge, the IRS may still enforce the tax lien by seizing or forcing the sale of assets covered by it, unless the lien is removed or settled.
• Lien Release Requires Separate Action: To get rid of the lien itself, you’ll typically need to pay the tax debt, settle it via an Offer in Compromise, or request a lien withdrawal if you qualify.

In short, bankruptcy may help with tax debt, but it doesn’t automatically eliminate IRS tax liens. Consulting an experienced IRS tax debt attorney – like those at taxlawyer.com – is crucial if an IRS tax lien is involved.

The best way to avoid an IRS tax lien is to be proactive about your tax obligations. This means:

• File and Pay on Time: Always file your tax returns by the deadline and pay the full amount due.  
• Communicate with the IRS: If you know you’ll have trouble paying, contact the IRS before the deadline.

If you already owe taxes and can’t pay in full, consider these options:

• Setting up a Payment Plan (Installment Agreement): This allows you to pay your debt in manageable monthly installments. The IRS offers various payment plan options.
• Negotiating an Offer in Compromise (OIC): This allows you to settle your tax debt for less than the full amount owed. However, it has strict eligibility requirements.
• Applying for Currently Not Collectible (CNC) Status: This puts your account on hold if you’re experiencing severe financial hardship. The IRS will temporarily stop collection efforts, but the tax debt remains.

It’s also vital to keep accurate records and seek professional tax attorney advice when needed.

TaxLawyer.com provides nationwide assistance with IRS tax liens. Our experienced IRS tax lien attorneys help individuals and businesses navigate complex IRS regulations, negotiate tax lien settlements, and protect assets from enforced collection. Check below, our list of serviced states to see if we operate in your area.:

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