How a lien arises
After the IRS assesses your tax and sends a notice and demand for payment, a lien arises if you don’t pay in full. It attaches to all your property, including real estate, vehicles and financial assets, and to property you acquire while it lasts. The IRS can then file a Notice of Federal Tax Lien, a public record that tells creditors the government has a claim.
Ways to deal with a lien
| Option | What it does |
|---|---|
| Release | Ends the lien. The IRS releases it within 30 days after you pay the debt |
| Withdrawal | Removes the public notice, though you still owe the debt. Apply on Form 12277 |
| Discharge | Removes the lien from a specific property, for example so you can sell it |
| Subordination | Lets another creditor rank ahead of the IRS, which can make a mortgage or refinance possible |
Two common withdrawal routes
- After release: if your balance is paid and you’ve filed all required returns for the past three years and are current on estimated payments.
- With a direct debit installment agreement: if you owe $25,000 or less (or pay down to that), the agreement pays the balance within 60 months or before the collection deadline, whichever is sooner, you’ve made three consecutive direct debit payments, and you’re otherwise in compliance.
Where to start
If you owe and have unfiled years, filing them is the first step toward any agreement that leads to a release or withdrawal. See catch-up filing.