IRS Lien SOlutions
What is an irs tax lien?
An IRS tax lien is the government's legal claim against your property when you fail to pay a tax debt. The lien applies to all current assets—such as real estate, vehicles, and personal property—as well as future assets acquired while the lien is in effect. Its purpose is to protect the government’s interest in recovering the unpaid tax.
It’s important to understand that a lien is not the same as a levy:
A lien secures the government’s right to your property as collateral for the debt.
A levy is the actual seizure of property or assets to satisfy the debt.
Notice Of federal tax lien (NFTL)
If you owe back taxes, the IRS may file Form 668(Y), Notice of Federal Tax Lien (NFTL) — a public record that alerts creditors the government has a legal claim against your property. Before filing the NFTL, the IRS is required to send you a Notice of Federal Tax Filing and Your Right to a Hearing.
Once filed, a tax lien can have serious consequences:
Damaged Credit: The lien can significantly lower your credit score and hinder your ability to obtain loans or credit cards.
Blocked Transactions: It may prevent you from selling, refinancing, or borrowing against your property.
Lasting Impact: Even if you file for bankruptcy, the lien and tax debt may survive and continue to affect you.
You have the right to appeal when the IRS notifies you of its intent to file a Notice of Federal Tax Lien.
How To Get Rid Of An IRS Tax Lien?
There are several ways to reduce the impact of a federal tax lien or have it removed entirely.
Below, we outline some of the most common options.
Paying the tax liability in full: release of the tax lien
The IRS is required to release a tax lien within 30 days after the tax debt is fully paid or determined to be legally unenforceable (such as when the statute of limitations has expired). The Certificate of Release of Federal Tax Lien (IRS Form 668(Z)) is typically filed automatically by the IRS once the debt is satisfied. However, in some cases, the release may not be issued, and you may need to contact the IRS to ensure it is properly filed.
To refinance: certification of subordination of federal tax lien
Subordination does not eliminate the federal tax lien, but it allows other creditors to take priority over the IRS, which can make it easier to obtain a loan or refinance a mortgage. If the IRS approves the subordination request, you may proceed with refinancing your property.
To sell the property: certificate of discharge of property from federal tax lien
A discharge removes the federal tax lien from a specific property. To obtain a discharge, you must formally request it from the IRS and demonstrate either that the sale will help pay down your tax liability or that there is no equity in the property for the IRS to take.
To improve your credit: withdrawal of filed notice of federal tax lien
A “withdrawal” removes the public Notice of Federal Tax Lien from the record, but you may still be responsible for the underlying tax debt if it has not yet been paid. To request a withdrawal, you must provide documentation demonstrating that your situation meets one of the criteria outlined in IRS guidelines, which allow for withdrawal even if a balance is still owed.