If you owe back taxes, you may find yourself facing a federal tax lien. A tax lien is a legal claim the government places on your property, including your home, car, and other assets, when you fail to pay your tax debt. An IRS tax lien can seriously harm your finances and make it difficult to sell or transfer your assets.
The good news? You can get an IRS tax lien release. This article will explain how a release of tax lien works, how long the process takes, and what you can do if a federal tax lien release is affecting you right now.
Takeaways
- A tax lien release removes the IRS’s claim from your property.
- You may get a lien released by paying your tax debt or through other resolution options.
- In most cases, you can automatically get an IRS lien release after 10 years.
- A Certificate of Release of Federal Tax Lien confirms the release of tax lien.
- Damien’s Law helps clients deal with liens, negotiate payoff terms, and secure an IRS lien discharge faster.
What is a tax lien release?
A tax lien release is the action the IRS takes to remove its legal claim on your property. When you have a tax lien, the government essentially uses your assets—like your home or car—as collateral for the debt you owe. A release of the tax lien signifies that the IRS is no longer claiming a stake in your property for unpaid taxes.
It’s important to understand that a release of lien is different from a lien withdrawal or a lien discharge.
- A withdrawal removes the public notice of the lien – in other words, the lien still exists, but there’s no public record.
- A discharge removes the lien from a specific asset – for example, so that you can sell the asset.
- A full IRS lien release means the government is no longer claiming any of your assets.
Once you’ve paid your debt, you should receive a certificate of release of federal tax lien. Note that evidence of the lien may still be in the public record, but it will show that the lien was released.
How do I qualify for an IRS tax lien release?
You can qualify for an IRS tax lien release by satisfying your debt in one of several ways. Here are the main options
Pay in full
Paying your full tax debt. When you pay what you owe, the IRS no longer has a claim on your property.
You should have an IRS payoff letter, which tells you the exact amount you must pay to satisfy your tax debt. This IRS payoff letter is especially useful if you currently have an IRS tax lien and want to sell property or secure a loan. The letter includes the total balance—original tax debt plus penalties and interest that have accrued up to a specific date, known as the “good through” date.
Settle with an offer in compromise.
Another option is to settle your debt through an Offer in Compromise (OIC). This process allows you to resolve your tax liability with the IRS for a lower amount than the original amount owed. Once you meet the terms of the OIC, the IRS releases the tax lien.
Let the tax debt expire.
Finally, you get a tax lien release once the statute of limitations expires. The expiration generally happens 10 years after the tax was assessed. Once you hit that deadline, the IRS is no longer legally able to collect the debt and will release the lien.
Establish hardship or erro.r
Depending on your situation, it is possible to request a lien release under hardship or error. The IRS can release a levy [lien] if it determines that the levy is causing an immediate economic hardship. If your request is denied or you believe the IRS has made an error, you may appeal. You may appeal before or after the IRS places a levy on your wages, bank account, or other property.”
Does the IRS Automatically Release a Lien After 10 Years?
The short answer? Yes. In most cases, an IRS tax lien will automatically release after 10 years. The 10-year period, known as the Collection Statute Expiration Date (CSED), starts from the date the IRS first assessed the tax debt. Once it expires, the Notice of Federal Tax Lien itself acts as the release document.
What Is a Certificate of Release of Federal Tax Lien?
A certificate of federal tax lien is the IRS’s official confirmation that they’ve removed a lien from your property. You need this document for clearing property titles, removing the lien from public records, and cleaning up your credit report.
The IRS generally releases a tax lien within 30 days of you paying off your tax debt. If you don’t receive the document within the specified timeframe, you can request one by submitting Form 668(Z) or calling the IRS. When requesting a certificate, include:
- Your name, address, and contact information
- The date of your request
- A copy of the Notice of Federal Tax Lien
- Your reason for the request
- Proof you paid the outstanding debt
Before issuing the certificate, the IRS may investigate to confirm you have fully paid your debt. The organization must verify your payment and may require a certified or cashier’s check or money order. If you have any questions or are having trouble getting your certificate, you should consult with a tax professional.
Is an IRS lien discharge or withdrawal the same as an IRS tax lien release?
No. An IRS lien discharge or withdrawal isn’t the same as an IRS tax lien release. While these terms relate to tax liens, they have different meanings and consequences. A tax lien release is the most comprehensive action that occurs once you’ve fully settled your tax debt and the IRS removes its legal claim on all of your property.
IRS lien discharge
An IRS lien discharge is different because it only removes the lien from a specific piece of property. For example, if you want to sell your house, you can get a discharge to clear the title, but the tax lien remains on all of your other assets, and the debt itself still exists.
Withdrawal
A lien withdrawal means the IRS removes the public notice of the lien. This removal allows you to request credit or sell assets without a public lien notice. However, a lien withdrawal doesn’t erase your debt. You still owe and must pay your back taxes and any accrued penalties and fees.
Under the terms of the IRS Fresh Start initiative, you may be eligible for this withdrawal option if:
- You’ve satisfied your outstanding tax liability.
- You’ve been granted an IRS lien release.
- You’re current on federal tax payments and estimated tax payments.
- You’ve remained compliant with individual, business, and other federal tax returns for at least three consecutive years.
You can also enter into an installment agreement with the IRS to pay off outstanding tax debt, penalties, and fees, and if you meet the following conditions, the IRS will withdraw the lien.
- You owe $25,000 or less in outstanding tax debts.
- You are a qualifying taxpayer.
- You agree to direct debit payments.
- You make a minimum of three consecutive installment agreement payments.
- You remain in compliance with other federal and state tax filing and installment agreement payment requirements.
How Damien’s Law Can Help
Damien’s Law specializes in helping clients resolve tax debt and handle the challenges that come with IRS collection actions. We can provide legal guidance and support by negotiating with the IRS, requesting payoff information, or pursuing other options like OIC or filing for a lien withdrawal or lien discharge when appropriate.
If you’re facing an IRS tax lien or struggling with unpaid taxes, we offer a free consultation to discuss your specific situation and explore your legal options. Don’t wait – contact us for help today.
FAQs
How long does it take to get an IRS lien released?
The process for getting an IRS lien release depends on how you satisfy your tax debt. The timeline can vary, but generally, the IRS is required to act within a specific timeframe once you meet your obligation. In most cases, the IRS will release a tax lien within 30 days after:
- You’ve paid your tax debt, including penalties and fees, in full.
- The tax debt becomes legally uncollectible, typically after the 10-year statute of limitations expires.
- The IRS accepts a bond guaranteeing payment of debt.
If more than 30 days pass since you satisfied your debt and you haven’t received the certificate of release of federal tax lien, contact the IRS Centralized Lien Operation to check on the release status.
What if my lien wasn’t removed after 10 years?
Typically, the Collection Statute Expiration Date (CSED) means you’ll receive an IRS lien release after 10 years. However, several scenarios can pause the collection clock and extend the CSED, including if you’ve filed for bankruptcy, have an OIC, have requested a collection due process hearing, or entered into a repayment plan with the IRS.
Can a lien hurt my credit even if it’s released?
No. A tax lien release won’t directly hurt your credit score because the three major credit bureaus—Experian, Equifax, and TransUnion—stopped including tax liens on credit reports in 2018. However, a tax lien release can indirectly affect your ability to get credit because the lien’s public record still exists. You can pursue a lien withdrawal to remove the public notice of the lien, making it harder for lenders to discover the record of tax debt.
What happens after the lien is released?
After the tax lien release, the IRS removes its legal claim on your property. This process doesn’t always happen immediately. The IRS must issue a Certificate of Release of Federal Tax Lien within 30 days of the debt being satisfied. This document is your proof that the IRS has released the lien.
Can I sell my house with a lien?
Yes, you can sell your house with a lien, but the process is more complicated than a typical home sale. A federal tax lien gives the government a legal claim to your property, so you can’t just sell your house and keep all the money. You’ll need to address the lien before or during the sale.
You can pay off the lien at closing if you have equity in your home. You’ll need to request an IRS payoff letter specifying the exact amount due, including penalties and interest, through the closing date. You can also request an IRS lien discharge, which removes the lien from your house specifically, allowing the sale to go through with a clear title.
What is an IRS payoff letter?
An IRS payoff letter has the most accurate information about how much you owe and must pay to satisfy your tax debt. You can request a payoff letter from the IRS. Lenders, title companies, and attorneys often request an IRS payoff letter to ensure you have paid your tax lien in full before a transaction is completed.
What is an IRS payoff statement?
The IRS payoff letter will include the IRS payoff statement, which is the total balance you owe. It includes the original tax debt plus any penalties and interest that have accrued through the “good through” date.
