The IRS filed a tax lien. What does it mean?
A federal tax lien is the government's legal claim against your property for an unpaid tax. A lien does not take anything. But filing the Notice of Federal Tax Lien establishes the government's claim publicly and can affect its priority against buyers and other creditors, which can complicate a sale or refinancing until it is resolved.
Or book a 30-minute call about the lien and what to do next.
Talk to us about your IRS problemThis first phase is a fixed fee, set before work begins. Nothing in it obligates you to the next phase.
A lien, a notice, and a levy are three different things.
Most confusion about tax liens comes from treating these as one. They are not.
- The lien arisesIf a tax is assessed and not paid after the IRS demands it, a lien arises automatically on all of your property and rights to property. It lasts until the liability is paid or the IRS's time to collect expires.
- The notice is filedThe IRS files a Notice of Federal Tax Lien in the public records. Until it does, the lien is not valid against purchasers, holders of security interests, mechanic's lienors or judgment lien creditors.
- A levy is separateA lien is a claim. A levy is the IRS actually taking property, and it has its own notice requirements and hearing rights.
IRC §6321 and §6322 (lien and its duration); §6323(a) and (f) (validity against third parties; place of filing); §6331 and §6330 (levy).
The 30-day window after a filing.
The IRS must notify you in writing within five business days after it files the notice of lien. You then have a 30-day period, beginning the day after those five business days, to request a Collection Due Process hearing with the IRS Independent Office of Appeals.Law · IRC §6320(a), (b); Treas. Reg. §301.6320-1
That notice usually arrives as Letter 3172.IRS practice
At the hearing you can raise collection alternatives and challenge the appropriateness of the lien filing, and the decision can be reviewed by the Tax Court. A timely request also suspends the IRS's period for collecting the tax while the hearing is pending. The hearing does not, by itself, remove the lien.Law · IRC §6320(c), applying §6330(c), (d) and (e)
If the 30-day period has passed, an equivalent hearing can be requested within one year after the five-business-day period ends. Appeals considers the same issues, but there is no Tax Court review of the decision.Law · Treas. Reg. §301.6320-1(i)
Release, withdrawal, discharge and subordination.
Only one of these is required of the IRS. The other three are decisions the IRS may make when the conditions are met.
Release
The IRS must issue a certificate releasing the lien within 30 days after the liability is fully paid or becomes legally unenforceable, or after it accepts a bond for the amount owed.
Law · Required · IRC §6325(a)Withdrawal of the notice
The IRS may withdraw a filed notice if the filing was premature or not in line with its procedures, if you have entered into an installment agreement that does not provide otherwise, if withdrawal will help collection, or if it is in your and the government's best interests. A withdrawn notice is treated as never filed, and on written request the IRS will make reasonable efforts to notify credit reporting agencies. Withdrawal of the notice is not payment of the tax.
Law · Discretionary · IRC §6323(j)Discharge of a specific property
The IRS may remove the lien from a particular property, for example when the property still subject to the lien is worth at least twice the liability and prior liens, or when the government's share is paid, has no value, or is held in escrow from a sale.
Law · Discretionary · IRC §6325(b)Subordination
The IRS may let another creditor's interest take priority over its lien, for example when it is paid the amount of the interest subordinated, or when subordination will ultimately increase what it collects. This is how a refinancing can proceed with a lien in place.
Law · Discretionary · IRC §6325(d)The lien is rarely the first thing to solve.
What matters is the balance behind the lien, which years are open, and whether a sale or refinancing is coming that will need a discharge or subordination in time.
Release follows full payment, or the balance becoming legally unenforceable. Short of that, an installment agreement can support a request to withdraw the notice, and a discharge or subordination can let a specific sale or refinancing go ahead. These are worth asking for when the conditions fit.Bridge's view · practitioner judgment
We take it from here.
- We take controlOnce you sign the authorization, we deal with the IRS for you. Send us any IRS letter you receive.
- Exactly where you standEvery year, balance, penalty and filing, taken from your IRS record rather than estimated.
- Your deadlines, risks and leverageIncluding whether the hearing window is still open and what any planned sale or refinancing will require.
- Your Resolution RoadmapIn writing: where you stand, what happens if nothing is done, and which paths are open to you.