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Understanding a Federal Tax Lien

A federal tax lien is the government's legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government's interest in all your property, including real estate, personal property and financial assets. A federal tax lien exists after the IRS:

• Puts your balance due on the books (assess your liability),

• Sends you a bill that explains how much you owe (Notice and Demand for Payment, and

• You refuse or neglect to fully pay the debt in time.

The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.

How to Get Rid of a Lien

Paying your tax debt in full is the best way to get rid of a federal tax lien.

Discharge of property removes the lien from specific property. IRS Publication 783 gives information on several provisions that determine eligibility.

Subordination does not remove the lien, but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage. IRS Publication 784 gives information on several provisions that determine eligibility.

Withdrawal removes the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property. However, you are still laible for the amount due. For eligibility, refer to Form 12277 

How a Lien Affects You

Assets-A lien attaches to all of your assets and to future assets acquired during the duration of the lien.

Credit-A lien may limit your ability to get credit.

Business-The lien attaches to all business property and to all rights to business property.

Bankruptcy-You tax debt, lien ,and Notice of Federal Tax Lien may continue after bankruptcy.

To schedule a FREE, Confidential, No-Obligation Tax Consultation, call me today at (561) 746-1926 or (561) 339-8102.