Taxes Solving Tax Issues How To Remove a Federal Tax Lien By William Perez Updated on November 27, 2022 Reviewed by Michelle P Scott Fact checked by David Rubin In This Article View All In This Article Liens vs. Levies Notifying Taxpayers of Liens Preventing a Lien Removing a Lien How a Lien Impacts Your Credit Where To Get Help Frequently Asked Questions (FAQs) Photo: The Balance / Julie Bang The Internal Revenue Service (IRS) files federal liens against taxpayers who have unpaid tax obligations. A federal tax lien is a document that goes on record with a county government as a matter of public record, usually in the location where the taxpayer lives, owns property, or conducts business. It notifies the general public that the taxpayer has an unpaid federal tax debt. Liens can attach to the taxpayer's real property or personal property. They record the full amount of the debt owed to the IRS. The IRS is paid first out of any sales proceeds before the taxpayer receives money if the taxpayer sells property that has a lien attached to it. Key Takeaways A tax lien is filed by the IRS to confirm and protect the agency's right to collect money from a taxpayer.A levy is a method of collecting a tax debt owed, often by taking the money from a bank account or paycheck.A tax lien won't occur without warning. You should receive notice that gives you 10 days to rectify the situation first.Tax liens can be withdrawn or released by the IRS if payment is made or under a few other circumstances. Liens vs. Levies The words "lien" and "levy" are sometimes used interchangeably, but liens are different from levies. A tax lien is a document filed by the IRS to protect the government's ability to collect money, while a levy is the forced collection of tax, usually by confiscating money directly out of a bank account or a paycheck. Note One easy way to remember the difference between a lien and a levy is to ask yourself whether you still possess the property in question. A lien attaches to a property, so the IRS will receive payment when that property is sold. A levy actually takes the property to collect a tax debt. Notifying Taxpayers That a Lien Has Been Filed The IRS will remind you of the tax debts you owe before it imposes a lien. The first step in the process begins when the IRS sends a notice of taxes owed and a demand for payment. The lien will automatically take effect 10 days after that. The IRS may also file a notice of federal tax lien in the public record at that point. This could have negative effects on your finances. Preventing a Lien Federal tax liens can be prevented by paying the tax in full before a lien is filed by the IRS, but that's not always possible for all taxpayers. You can prevent liens by setting up an installment agreement with the IRS that meets certain requirements if you can't pay the entire amount in one lump sum. The IRS won't file a federal tax lien if a taxpayer sets up either a guaranteed installment agreement or a streamlined installment agreement, but it's up to the taxpayer to contact the IRS to establish these plans. The IRS won't prompt taxpayers to use these plans to avoid a lien. Depending on how much you owe, you'll have the option to pay off the debt in 180 days or via a long-term installment agreement, which will require a setup fee. You'll continue to be assessed fees, interest, and some penalties until the debt is fully paid, even if you've entered into an installment plan. Removing a Lien The IRS will remove a federal tax lien if the lien was filed in error, when the outstanding balance is paid in full, or when the outstanding balance is otherwise satisfied, such as through a successful offer in compromise. It will also remove the lien if it becomes unenforceable, which can happen if it's expired due to the 10-year statute of limitations. There are two basic ways to remove a federal tax lien: withdrawal and release. Withdrawing a Federal Tax Lien The IRS will rescind (or "withdraw") a federal lien if it was determined to have been originally filed in error. This would be the case if the wrong taxpayer is targeted for the debt. It's as if the lien had never been filed in the first place when the IRS withdraws it. You should contact the IRS right away if you believe that such a situation could apply to you and a lien was filed against you by mistake. An IRS agent will review your account history to verify that you don't owe the outstanding tax and will prepare the paperwork necessary to withdraw it. Releasing a Federal Tax Lien Releasing a federal lien means that the lien doesn't encumber the property any longer. County records will be updated to reflect that the lien has been released. Liens are released within 30 days of full payment of the outstanding tax obligation or upon setting up a guaranteed or streamlined installment agreement. Note The IRS might release a federal tax lien if it will speed up the collection of tax or if it's in the best interests of the taxpayer and the government. But most federal tax liens are automatically released by the IRS after full payment of the tax owed. Taxpayers can be eligible for lien release under the Fresh Start Program if their outstanding balance is under $25,000. You might consider bringing your balance under $25,000 by transferring some or all of your tax to a credit card or a home equity line, or by making payments to bring your balance under the $25,000 threshold. How a Federal Tax Lien Impacts Your Credit Lien information used to be picked up by the three major credit reporting bureaus, but all three agencies stopped collecting tax lien information in 2018. They removed all information about tax liens from credit reports. This means that tax liens will no longer show up on your credit report or affect your credit score. But the IRS does make a tax lien a matter of public information even though the lien isn't officially part of your credit report. Lenders, credit card companies, landlords, and potential employers could learn about any liens against your property. They may use that information to make a judgment about you, such as a decision on a loan, a rental, or if you apply for a job. Where To Get Help Taxpayers who need assistance in dealing with tax liens and tax collections should seek the advice of a federally authorized tax practitioner, such as a tax attorney, a certified public accountant, or an enrolled agent. Taxpayers can also receive free help from publicly funded tax clinics and the Taxpayer Advocate Service. Frequently Asked Questions (FAQs) How do I search public records for a notice of a federal tax lien? Property taxes are managed at the state and local levels, so these are the best places to start your search for federal tax liens. Your county may retain real property sale and transfer records for your area, and that means your county's website will probably have the resources you need to search for tax liens. How long does it take to get a federal tax lien withdrawn? There's a firm 30-day deadline for releasing liens after payment has been made, but the situation with withdrawals isn't as clear. Getting a tax lien withdrawn depends on appealing an IRS decision, so it isn't as easy as the IRS simply notifying county authorities when the debt has been settled. You can expect the tax lien to be withdrawn soon after you're notified of the favorable ruling if the IRS rules in your favor. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. IRS. "What's the Difference Between a Levy and a Lien?" IRS. "Internal Revenue Manual: 5.12.2 Notice of Lien Determinations." IRS. "Topic No. 201 The Collection Process." IRS. "Topic No. 201 The Collection Process." IRS. "Additional Information on Payment Plans." IRS. "Understanding a Federal Lien." IRS. "Internal Revenue Manual: 5.12.9 Withdrawal of Notice of Federal Tax Lien." IRS. "IRS Announces New Effort To Help Struggling Taxpayers Get a Fresh Start; Major Changes Made to Lien Process," Pages 2-3. Experian. "Tax Liens Are No Longer a Part of Credit Reports." H&R Block. "Does IRS Debt Show on Your Credit Report?" IRS. "Form 12277, Internal Revenue Service Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien," Page 2.