If you owe back taxes, the IRS can secure its interest in your property by filing a federal tax lien. It doesn’t mean your property will be seized immediately — but it does mean the government now has a legal claim on everything you own (and sometimes, what you acquire later).
An IRS lien can affect your home, bank accounts, business assets, and credit, but it can also be resolved or withdrawn under the right circumstances.
📘 Official Resource: Understanding a Federal Tax Lien — IRS
What Is an IRS Tax Lien?
A tax lien is the government’s legal claim against your property when you fail to pay a tax debt after notice and demand. It’s not the same as a levy (which takes property) — a lien simply secures the IRS’s interest in your assets until the debt is satisfied.
The lien arises when:
- The IRS assesses your tax liability, and
- You neglect or refuse to pay.
If the balance remains unpaid, the IRS may then file a Notice of Federal Tax Lien (NFTL) to make the lien public.
📘 Reference: Notice of Federal Tax Lien — IRS
What Property Does a Tax Lien Cover?
A federal tax lien attaches to:
- All real property (homes, land, rentals)
- Personal property (vehicles, jewelry, furniture)
- Financial assets (bank accounts, investments, business interests)
- Future property and rights to property you acquire while the lien is active
This means even newly acquired property can fall under the lien’s reach until your debt is resolved.
📘 IRS Guidance: Lien on Personal and Real Property
How a Tax Lien Affects You?
Your Home and Real Estate
You generally can’t sell or refinance without satisfying the lien first, as the IRS’s claim must be paid from sale proceeds.Your Credit
Although tax liens no longer appear on the “Big Three” credit reports (Equifax, Experian, TransUnion), they remain public records — visible to lenders and title companies.
Your Business
If you’re self-employed, the lien can attach to business receivables or future income streams, making it harder to secure loans or contracts.Your Finances
A lien can complicate bank loans, mortgages, and even job opportunities in regulated industries.
📘 Reference: IRS Federal Tax Lien Impact
When the IRS Files a Notice of Federal Tax Lien (NFTL)?
The IRS files an NFTL in local or state public records to alert creditors of its claim. You’ll receive Letter 3172 — Notice of Federal Tax Lien Filing and Your Right to a Hearing.
You have 30 days from that notice to request a Collection Due Process (CDP) hearing using Form 12153.
📘 Learn More: Collection Due Process Hearings
How to Prevent an IRS Lien?
You can avoid a lien entirely by acting early:
Pay in Full — Even partial payments can prevent NFTL filing if your debt drops below certain thresholds.
Set Up an Installment Agreement — The IRS generally doesn’t file a lien for debts under $50,000 when you enter a Direct Debit Installment Agreement.
📘 Apply Online: IRS Payment Plans & Installment Agreements
Request a Short-Term Extension or Hardship Status — Temporarily pauses collections.
📘 Program Info: Currently Not Collectible Program
How to Remove or Release a Tax Lien?
There are several ways to remove a lien once it’s filed:
1. Pay Your Balance in Full
Once paid, the IRS will issue a Certificate of Release within 30 days.
📘 Reference: Certificate of Release of Federal Tax Lien
2. Request a Lien Withdrawal
If you enter a Direct Debit Installment Agreement, owe $25,000 or less, and make three consecutive payments, you can request lien withdrawal with Form 12277.
3. Submit an Offer in Compromise (OIC)
If accepted, your tax debt is settled for less than the full amount, and the lien is released once payment terms are completed.
📘 OIC Overview: Offer in Compromise — IRS
4. File for Discharge or Subordination (Advanced Options)
If you need to sell or refinance, the IRS may agree to discharge specific property from the lien or subordinate its claim to a lender.
📘 Reference: Publication 783 (Discharge) & 784 (Subordination)
How Long Does an IRS Lien Last?
A federal tax lien lasts as long as the tax debt is legally collectible — typically 10 years from the assessment date, unless extended by certain actions (like bankruptcy or an Offer in Compromise review). Once the collection statute expires, the lien self-releases, but verifying that through the IRS is essential.
📘 Reference: Collection Statute Expiration Date (CSED)
Need help with a similar issue? Contact our firm today for a consultation.
An IRS tax lien doesn’t mean you’re losing your home tomorrow — but it does mean the government has staked a claim. The good news: liens are manageable and often removable through payment, settlement, or withdrawal programs.
If you’ve received a Notice of Federal Tax Lien, contact Pelham PLLC immediately. Our tax attorneys can negotiate lien withdrawal, prevent property seizures, and restore your financial standing.
FAQs
What’s the difference between a lien and a levy?
A lien secures the IRS’s interest in your property; a levy actually takes it.
Will a tax lien ruin my credit?
Tax liens no longer appear on consumer credit reports, but lenders and public records still see them, affecting financing opportunities.
How soon can the IRS file a lien after I owe taxes?
As soon as you miss payment after the Notice and Demand for Payment, the lien arises by law — though public filing usually happens after additional notices.
Can I sell my house with a tax lien?
Yes, but you’ll typically need IRS approval and must pay or negotiate release of the lien proceeds.
Does bankruptcy remove a tax lien?
No. Bankruptcy may discharge the underlying tax debt, but a recorded lien can still attach to your property until released.
