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Federal Tax Liens
Federal Tax Lien Withdrawal, Discharge & Subordination
A Notice of Federal Tax Lien (NFTL) attaches to all your property and rights to property. It affects your credit, your ability to sell real estate, and your access to business financing. There are specific IRS procedures to address it.
What Is a Federal Tax Lien?
A federal tax lien arises automatically when the IRS assesses a tax liability, sends a demand for payment, and the taxpayer fails to pay. The lien attaches to all current and future property — real estate, financial accounts, vehicles, and business assets.
The IRS files a Notice of Federal Tax Lien (NFTL) in the public record to establish priority over other creditors. Once filed, the lien appears on credit reports and can block real estate sales, refinancing, and business loans.
A lien is not the same as a levy. A lien is a legal claim against your property. A levy is the actual seizure of property to satisfy the debt.
Lien Resolution Options
Lien Withdrawal
The IRS removes the NFTL from the public record as if it was never filed. Available when the liability is paid in full, when the taxpayer enters a direct-debit installment agreement for balances under $25,000, or when withdrawal will facilitate collection and is in the best interest of the government. Withdrawal is the most favorable outcome — it eliminates the public record entirely.
Lien Discharge
The IRS releases its lien on a specific piece of property — typically to allow a real estate sale or refinancing to proceed. The lien remains on other property. The IRS must receive at least the value of its interest in the discharged property.
Lien Subordination
The IRS agrees to allow another creditor's claim to take priority over the federal tax lien. Used when a taxpayer needs to refinance a mortgage or obtain a business loan. The IRS must determine that subordination will ultimately facilitate collection.
Lien Release
The lien is released when the liability is fully paid, the collection statute expires, or the IRS accepts a bond. A release does not remove the lien from the public record — it only shows the lien as satisfied. Withdrawal is preferable to release for credit purposes.
Lien Withdrawal Under the Fresh Start Initiative
The IRS Fresh Start Initiative expanded lien withdrawal eligibility. A taxpayer may qualify for withdrawal if the balance is $25,000 or less, the taxpayer enters a direct-debit installment agreement, and three consecutive payments have been made. This is one of the few situations where lien withdrawal is available without full payment.
- Balance must be $25,000 or less (or reduced to $25,000)
- Must enter a direct-debit installment agreement
- Three consecutive payments must be made
- Must be in compliance with all filing requirements
- Withdrawal is not automatic — a formal request must be submitted
Start with a Paid Tax Resolution Investigation
Before recommending any resolution strategy, we obtain your IRS transcripts, verify your compliance status, and deliver a written analysis of every option available to you.
No resolution strategy is recommended until we have reviewed your transcripts and financial position. Eligibility depends on your specific facts.