The IRS will release federal tax liens once they no longer have a claim on your property or assets. That generally happens if you pay in full, or the collection period expires on the tax debt.
Ready to get help with IRS tax liens? Then, you need the tax lien attorneys at Damiens Law. We’ll help you get the lien released, and if that’s not the right move now, we’ll look into subordination, discharge, or withdrawal of your federal tax lien.
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 securing certain other resolution options.
- In most cases, the IRS automatically releases the lien after 10 years.
- A Certificate of Release of Federal Tax Lien confirms the release of the tax lien.
- Damiens 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 what happens when the IRS terminates its claim in your assets. The IRS files Form 668(Z), Certificate of Release of Federal Tax Lien, with the same offices where it recorded the lien – for example, if the agency filed the Notice of Federal Tax Lien with your county recorder’s office, they will also file Form 668(Z) with that same office.
The IRS files this form when you satisfy the tax debt by paying in full or settling through an offer in compromise, or if the tax debt expires.
How to get an IRS tax lien released
You can qualify for an IRS tax lien release by paying off the tax debt in full, satisfying the debt with an offer in compromise, or proving the lien was filed in error. The IRS will also release the lien if the collection period expires or you provide a bond for the tax debt. Here are more details.
| How the debt is resolved | When the release happens | What you receive | Who acts |
|---|---|---|---|
| Paid in full | Within 30 days after the balance, including penalties and interest, is satisfied | Certificate of Release of Federal Tax Lien (Form 668(Z)) | IRS issues it; if it doesn’t arrive, you request it through the Centralized Lien Operation (Pub 1450) |
| Offer in Compromise terms met | Within 30 days after the accepted offer amount is paid | Form 668(Z) | IRS issues it once payment of the offer is complete; you request it if it doesn’t arrive |
| CSED expires | When the 10-year collection period ends and the debt becomes legally unenforceable | Usually no separate document; the filed notice is generally self-releasing (verify Form 668(Y) language). A release certificate can be requested | Automatic; you request a certificate if a lender or title company needs one |
| IRS accepts a bond | Within 30 days after the IRS accepts a bond guaranteeing payment | Form 668(Z) | You post the bond; IRS issues the release |
| Lien filed in error | Within 14 days after the IRS agrees the filing was erroneous (verify) | Release plus a statement that the lien was filed in error | You file an appeal for an erroneous lien; IRS issues the release |
Pay in full
When you pay what you owe in full, the IRS no longer has a claim on your property, and they must release the tax lien within 30 days of payment.
You can request an IRS payoff letter, which shows the exact amount you must pay and the deadline (known as the “good through” date) before additional interest and penalties hit. A payoff letter is especially useful if you currently have an IRS tax lien and want to sell property or refinance a loan.
If you can’t afford to pay in full, you can request an installment agreement to make monthly payments over time. Then, the IRS will release the lien once you’ve completed your payment plan.
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 pay the settlement, the IRS will release the lien.
However, you must stay compliant for five years after the IRS accepts an OIC on your account. If you miss a filing or incur new tax debt, the agency can retroactively take back the offer, reinstate the tax debt, and file a new lien against you.
Let the tax debt expire.
You can also get a tax lien released once the statute of limitations on its collection period expires. The expiration generally happens 10 years after the tax was assessed. Once you hit that deadline, the IRS can no longer legally collect the debt and must release the lien.
Certain events start and stop the timer – use our CSED calculator to estimate how long you’ve got left.
What if the lien was filed in error?
If the lien was filed in error but you actually owe the tax debt, the IRS will withdraw the lien. That means they remove it from the public record, but they don’t release your obligation to the tax debt.
However, if the tax debt underlying the lien was assessed in error, then the IRS will only release the lien once you get them to eliminate the incorrect tax debt. Once a lien is issued, disputing tax debt can be very difficult, but an experienced attorney can help you explore all the options, including an Offer in Compromise based on doubt as to liability.
What Is a Certificate of Release of Federal Tax Lien?
A Certificate of Federal Tax Lien Release, Form 668(Z), is the IRS’s official confirmation that they’ve removed a lien from your property. It includes your name (individual or business), the type of tax, the tax period, the date of assessment, the last day for re-filing, and any unpaid balance of the tax assessment, if applicable. It also shows the last day for refiling the lien.
What if I don’t qualify for a lien release?
If you don’t qualify to have the lien released right now, these options might help you:
- Lien withdrawal: removes the public notice of the lien; request with Form 12277. If you still owe the tax, the IRS won’t release the lien, but they will withdraw it if you owe under $25,000 and set up a qualifying payment plan or if you meet other criteria.
- Discharge: removes the lien from a specific asset; for example, so that you can sell an asset to pay off some or all of your tax liability.
- Subordination: when the IRS agrees to move behind another creditor in priority on an asset; for example, if you want to borrow against an asset to pay off your taxes, the IRS must subordinate its lien before the lender will approve the loan.
How Damiens Law Can Help
Damiens 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, reach out to a tax lien attorney from Damiens Law for help. 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 IRS generally releases a tax lien within 30 days after you pay the tax debt, including penalties and interest, in full or with an offer in compromise. The agency will also release the lien 30 days after the collection period expires or if you provide a bond guaranteeing payment of the debt.
What if the IRS doesn’t release the lien within 30 days?
If more than 30 days have passed 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?
Then, the collection period may have been extended, or the IRS made a mistake calculating the Collection Statute Expiration Date (CSED). 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?
A lien doesn’t affect your credit score because the three major credit bureaus (Experian, Equifax, and TransUnion) stopped including tax liens on credit reports in 2018. Generally, if you’re applying for credit, a released lien shouldn’t hurt you, but if it does, ask the IRS to withdraw it from the public record.
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.
If the IRS releases the lien is there still a record of it?
Potentially, yes. A release means that you don’t owe the debt associated with the lien. If you want the lien’s existence to be removed from the public record, you’ll need to request a withdrawal.
Is a lien discharge the same as a release?
No, a release is when you no longer owe anything to the IRS related to that lien. A discharge is when the IRS detaches a lien from a specific asset. You still owe the debt, but since the lien has been removed from that asset, you can sell or transfer it freely.
