The Federal Tax Lien attaches to all property and/or rights, title or interest in property, whether real or personal, tangible or intangible, presently belonging to a taxpayer or acquired during the life of the lien. There are no exemptions in law.
The IRS Federal Tax Lien is the government’s claim on taxpayer’s property for the payment of a tax debt. By itself, it doesn’t transfer or seize the property. Encumbered property can only be taken and sold after a separate levy or seizure action by the IRS.
Section 6321 of the IRC establishes a tax lien upon assessment of a tax liability when notice and demand is made upon the taxpayer and full payment is not made. IRS lien rights are no greater than the rights of the taxpayer.
Release of Lien:
IRC 7432 requires the IRS to release a Federal Tax Lien no later than 30 days after the liability is fully paid or the lien becomes legally unenforceable.
Examples of unenforceable liens are as follows:
- Tax Liability is discharged in bankruptcy (absent equity in exempt or abandoned property); or
- Statute for collection expires; or
- Tax Liability is abated; or
- IRS may also release a lien when it accepts a bond or other collateral from a taxpayer; or
- IRC 7432 provides for a civil action for damages against IRS if the lien is not released after proper notice
The present Notice of Tax Lien (NFTL) form used by IRS is self-releasing. If the Service allows the NFTL to expire without refiling the lien, then the lien is released.
The full amount of your lien will remain a matter of public record until it is paid in full, including all accruals and additions. However, at any time you may request an updated lien payoff amount to show the remaining balance due by calling the toll-free customer service telephone number at 1-800-913-6050. An IRS employee will issue you a letter with the current amount that must be paid before we release the Notice of Federal Tax Lien.
By law, a filed notice of tax lien can be withdrawn if:
- The notice was filed too soon or not according to IRS procedures,
- You entered into an installment agreement to pay the debt on the notice of lien (unless the agreement provides otherwise),
- Withdrawal will speed collecting the tax, or
- Withdrawal would be in your best interest (as determined by the Taxpayer Advocate), and in the best interest of the government.