If you owe the IRS and do not pay, the government can file a federal tax lien against your property. It can make borrowing harder, but there are ways to get it released, withdrawn or put behind other creditors.
This guide explains how a lien arises, how it differs from a levy, how to release, discharge, subordinate or withdraw it, and who to contact, using the IRS page on understanding a federal tax lien.
The IRS says a federal tax lien is the government's legal claim against your property when you neglect or fail to pay a tax debt, protecting the government's interest in all your property including real estate, personal property and financial assets. A lien exists after the IRS assesses your liability, sends a Notice and Demand for Payment and you neglect or refuse to pay the debt in time. The IRS then files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property. It attaches to all your assets and to future assets acquired while the lien lasts, covers all business property and rights to it including accounts receivable, and may limit your ability to get credit. If you file for bankruptcy, the tax debt, lien and notice may continue after the bankruptcy.
| Lien | Levy | |
|---|---|---|
| What it is | Secures the government's interest in your property | Actually takes the property to pay the tax debt |
| When | After assessment, demand and non-payment | If you don't pay or make arrangements, the IRS can levy, seize and sell any real or personal property you own or have an interest in |
The IRS says not paying your taxes when they are due may cause the filing of a Notice of Federal Tax Lien and/or an IRS levy action. A pending payment plan request generally stops levies; see our IRS payment plan guide.
| Option | What it does |
|---|---|
| Pay in full | The best way: the IRS releases your lien within 30 days after you have paid your tax debt |
| Discharge | Removes the lien from specific property (Publication 783) |
| Subordination | Does not remove the lien but lets other creditors move ahead of the IRS, which may make it easier to get a loan or mortgage (Publication 784) |
| Withdrawal | Removes the public Notice of Federal Tax Lien so the IRS is not competing with other creditors for your property; you are still liable for the amount due (Form 12277) |
Two Fresh Start withdrawal options exist. One may allow withdrawal after the lien's release if your liability is satisfied, you are in compliance with filing for the past three years and you are current on estimated tax payments and federal tax deposits. The other may apply if you entered or converted to a Direct Debit installment agreement: you are a qualifying taxpayer, you owe $25,000 or less (you may pay down to $25,000 first), the agreement fully pays the debt within 60 months or before the Collection Statute expires, you are in full compliance with other filing and payment requirements, you have made three consecutive direct debit payments and you have not defaulted on any Direct Debit installment agreement.
You can avoid a lien by filing and paying all your taxes in full and on time. If you cannot, do not ignore IRS letters; payment options can help you settle your debt over time, and our offer in compromise guide and penalty abatement guide cover other relief. Under certain circumstances you may be able to appeal the filing of a Notice of Federal Tax Lien (see Publication 1660). Help is available from the IRS Centralized Lien Operation at 800-913-6050 for basic issues such as verifying a lien or requesting a payoff or release, and from the Taxpayer Advocate Service at 877-777-4778.
| Situation | What the IRS page points to |
|---|---|
| You paid the whole balance last week | The IRS releases the lien within 30 days of payment |
| You owe $22,000 on a direct debit installment agreement that pays in full within 60 months, with three payments made | May qualify for withdrawal of the filed notice, if the other conditions are met |
| You owe $40,000 on a direct debit agreement | Pay the balance down to $25,000 before requesting withdrawal |
| You are refinancing and the lien blocks the loan | Ask about subordination (Publication 784) or withdrawal |
These are our illustrations of the IRS conditions, not IRS determinations.
IRS: Understanding a federal tax lien, IRS: Payment plans and installment agreements.