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Home / FAQ / Notice of Federal Tax Lien: What This Letter Means & What to Do

Notice of Federal Tax Lien: What This Letter Means & What to Do

April 9, 2015 By Manny Davis

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Amend a tax returnIf the IRS has sent you a Notice of Federal Tax Lien, the worst thing that you can do is ignore it. A Notice of Federal Tax Lien should be taken very seriously. There are many things that can happen as a result of receiving a Notice of Federal Tax Lien, and if you are not aware of what this letter means for you, how to address it and what the consequences of it may be, you will likely worsen your situation.

What is a Tax Lien?

The IRS attaches a tax lien to your property in order to secure the repayment of the taxes that you owe. If you do not pay off your tax liabilities and you have over $10,000 in taxes owed, the IRS will stake claim to your property.

Is It Possible to Remove a Tax Lien?

It is possible to release a tax lien filed against you if you take the proper measures, but there is a clear distinction between a release and a withdrawal. With a release, a tax lien will still show on your credit report as paid or released. You can and should request to have the tax lien withdrawn, whereby the tax lien is completely withdrawn from your credit report. If a tax lien is released but not withdrawn, the “paid status” of the tax lien will remain on your record.

The IRS will release and/or withdraw a tax lien if you:

  1. Pay Your Tax Liability. By paying your taxes owed in full – which means paying all accrued interest and penalties in addition to the original amount owed – you can have the IRS release your tax lien within 30 days. The option to have the tax lien withdrawn is not available under this circumstance.
  2. Submit a Bond. If you submit a bond that guarantees your willingness and ability to pay back what you owe the IRS, your lien will be released within 30 days. In this case, you may also be able to successfully request that the tax lien be withdrawn by the IRS.
  3. Set Up an Installment Agreement. If you set up a direct liability installment agreement with the IRS and you owe less than $25,000, you are able to have the tax lien completely withdrawn from your credit report – or not added to your credit report at all if it has not been already – after a certain period of successful monthly payments.

Simply put, the only way to release a lien filed against you is to either pay the IRS what you owe or show the IRS that you plan on paying in the near future.

What If I Disagree with the Tax Lien Filed Against Me?

You reserve the right to appeal a tax lien filed against you. By law, the IRS is obligated by notify you in writing within five days after filing the lien. The Notice of Federal Tax Lien will be mailed to your address, delivered in person or left at your home. If you believe that a mistake has been made, you can ask the IRS to review your case. Additionally, you can request a Collection Due Process hearing. If granted, once the hearing is complete you will receive a determination from the IRS, either that the tax lien is staying in place or that it is being withdrawn or released.

Next Steps

If you have received a Notice of Federal Tax Lien from the IRS, you should deal with it immediately. You can have the lien released by paying what you owe, or – if you feel there was a mistake – you should begin the appeal process. Regardless of the path you choose to take, be sure to take the severity of this situation seriously.

FAQ Related Topics and Help

Back Taxes Frequently Asked Questions
Common Q&A about tax problems with the IRS. Find the questions that are most applicable to your situation to find detailed guides on resolving your problem.

How to Release a Tax Lien
A tax lien is a scare tactic that the IRS uses to force taxpayers to pay their back taxes. Learn about the different ways that you can remove the IRS tax lien filed against you.

General Tax Lien Information
Understand what a tax lien is, why it is filed, how to handle the lien and what the consequences of ignoring it may be.

Tax Lien Help
Remove a tax lien quickly with the assistance of our experienced team of tax professionals. Discover the benefits of hiring a tax professional to help you resolve your tax troubles.

Notice of IRS Intent to Levy
If you make the right moves to deal with a notice of Intent to Levy properly, you have a much better chance of getting back on good terms with the IRS so that things do not progress any further.

IRS Liability Collection Process
If you received a notice of federal tax lien you are pretty far along in the IRS collection process. Understand how this process works and what you can expect next if no action is taken.

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Disclaimer: We are not affiliated with the IRS, any private tax collector, or any state tax agency. The information provided on this website is for general educational or informational purposes only. Nothing on this website should be interpreted as legal or tax advice for any individual or business tax case. Before taxpayers sign up with a tax relief or tax resolution company, they should request a free consultation in order to understand how tax relief services work and the associated costs. The free consultation comes with no obligation to use any product or services. In many cases, a reputable tax resolution firm can provide taxpayers with relief.  

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