Top 5 Questions About IRS Tax Liens Answered

Receiving a notice about a Federal Tax Lien from the IRS can be deeply unsettling. Many people confuse a lien with a levy, or assume their financial life is over. The truth is, a tax lien is a serious legal tool, but understanding exactly what it is and what it isn't is the critical first step in resolving your tax debt.

Here are the top five questions taxpayers have about IRS tax liens and what you need to know to plan your next steps before the IRS escalates collection activity.

1. What’s the difference between a lien and a levy?

• A lien is a legal claim on your property; it secures the government's interest in what you own.

• A levy is the actual seizure of assets, such as taking money from your bank account, garnishing your wages, or seizing and selling real estate.

2. Will a lien show up on my credit report?

• While Notice of Federal Tax Liens (NFTLs) are generally no longer reported to the three major credit bureaus (Equifax, Experian, and TransUnion), the NFTL itself is a public record. This means that lenders, title companies, and other financial institutions performing thorough due diligence can still discover the lien, which may significantly hurt your ability to borrow or obtain favorable interest rates.

3. Can a lien be removed?

• Yes, a lien can be officially released once the debt is paid in full. It can also be resolved through a formal settlement, such as an Offer in Compromise.

• In certain cases, you can apply for a lien withdrawal using Form 12277, which removes the public notice (NFTL) as if it were never filed, even if the debt is being paid through a qualifying installment agreement.

4. How long does a lien last?

• A tax lien remains attached to your property until the debt is resolved (paid in full, settled, or determined to be uncollectible) or until the statute of limitations runs out, which is generally 10 years from the date the tax was assessed. Note that certain actions, such as bankruptcy or requesting an appeal, can legally pause (suspend) this 10-year period.

5. Can I sell property with a lien on it?

• Yes, but the IRS has rights to the proceeds. To clear the title for the buyer, you will typically need a Certificate of Discharge, which removes the lien from that specific property. The proceeds from the sale are then used to satisfy all or part of the tax debt. You can also request a subordination, which allows another creditor (like a new mortgage lender) to take priority over the IRS claim.

Understanding that a lien is a tool for securing a debt, not an immediate asset seizure, gives you time to explore your options. The most important step is to act quickly and not ignore IRS notices.

The focus of our practice is helping individuals and businesses resolve their IRS tax problems, including tax liens and collection issues. We serve the Las Vegas, Nevada, St. George, Utah areas, and elsewhere, and we can guide you through the process to find the best possible outcome.

If you or someone you know is dealing with IRS problems, contact us today:

• Phone: 702-533-8984

• Email: candy@numbercruncherllc.tax

 

Candace (Candy) Stevens, EA

CEO/President of

Number Cruncher LLC

cstevens@numbercruncherllc.tax

 

www.numbercruncherllc.tax