Quick overview

If the IRS files a Notice of Federal Tax Lien (NFTL) against you, it means the government has recorded its legal claim against your property for unpaid federal taxes. A lien does not immediately take your home, but it does: (1) create a public record that can harm your ability to sell or refinance; (2) give the IRS priority over later creditors; and (3) often appear on title searches (and sometimes on credit reports). Acting promptly and strategically is essential.

In my practice helping taxpayers for more than 15 years, the clients who reacted quickly—verified the filing, obtained account transcripts, and chose a clear resolution—almost always avoided foreclosure and minimized damage to credit and refinancing options.

Step 1 — Verify the lien and collect documents

  • Confirm what was filed: request a copy of the Notice of Federal Tax Lien from the county recorder where you own property. The NFTL is a public record the IRS files locally.
  • Get your IRS account and tax transcripts to confirm the assessed balance, the date of assessment, and collection activity (use IRS Get Transcript online or by mail) (IRS: Get Transcript).
  • Gather supporting documentation: prior IRS notices, proof of payments, wage statements, and bank records. These are essential if the lien was filed in error or if you’ll ask for relief.

Authoritative sources: IRS information on tax liens explains what’s filed and how to get a release (IRS: Tax Liens — https://www.irs.gov/businesses/small-businesses-self-employed/tax-liens).

Step 2 — Contact the IRS and consider hiring a professional

  • Call the IRS Collection department using the phone number on IRS notices. Ask for the account history and the Collection Representative handling the case.
  • If you find discrepancies, request a validation of the assessment and copies of notices sent to you.
  • Strongly consider professional help. A CPA, enrolled agent, or tax attorney can negotiate with the IRS, prepare an Offer in Compromise, or request lien withdrawal/subordination. In my experience, having a qualified representative reduces back-and-forth mistakes and speeds resolution.

Internal help pages that explain release and negotiation options: “Tax Liens: What They Are and How to Get Them Released” (https://finhelp.io/glossary/tax-liens-what-they-are-and-how-to-get-them-released/) and “How to Obtain a Certificate of Release of Federal Tax Lien” (https://finhelp.io/glossary/how-to-obtain-a-certificate-of-release-of-federal-tax-lien/).

Step 3 — Choose a realistic resolution path

Your options depend on ability to pay, tax history, and collection status:

  • Pay in full: Paying the assessed balance removes the government’s basis to keep the lien. After full payment, the IRS issues a Certificate of Release of Federal Tax Lien — generally within 30 days (IRS: Certificate of Release).
  • Installment Agreement: Entering an approved installment agreement can sometimes lead to lien withdrawal (under certain Fresh Start conditions), or at least shows a plan to satisfy debt. Direct-debit installment agreements are more likely to qualify for withdrawal consideration.
  • Offer in Compromise (OIC): If you can’t pay the full tax due, an OIC (Form 656) may settle the debt for less than the full amount; eligibility is strict and the IRS requires full financial disclosure. An approved OIC leads to lien release once the terms are met (IRS: Offer in Compromise).
  • Subordination: If you need to refinance or sell, request subordination to allow a new lender to take priority over the IRS lien. Subordination doesn’t remove the lien; it simply changes lien priority to facilitate a loan.
  • Certificate of Discharge: For the sale of a specific property, request a Certificate of Discharge so title can transfer for that parcel. This limits the lien’s effect on a particular sale while it remains outstanding for other assets.

See our guide on how liens affect property sale and title transfers: “How Tax Liens Affect Property Sales and Title Transfers” (https://finhelp.io/glossary/how-tax-liens-affect-property-sales-and-title-transfers/).

Step 4 — Requests the IRS recognizes (release, withdrawal, discharge, subordination)

  • Release: The IRS issues a Certificate of Release after the tax is paid or when the collection statute of limitations expires. The release clears the government’s claim on property.
  • Withdrawal: Under IRS rules (including Fresh Start provisions), the IRS may withdraw an NFTL if withdrawal will aid collection or if the lien was filed prematurely. A common qualifying action is entering a direct-debit installment agreement or paying the balance in full within a short period. Withdrawal is different from release — it removes public notice of the lien.
  • Discharge: Ask for a discharge of a particular property to allow sale or refinancing.
  • Subordination: Request subordination to permit a mortgage or refinance to take priority.

The IRS explains these remedies and the forms/processes on its tax lien pages (IRS: Tax Liens).

Practical timeline and expectations

  • Verification and record-gathering: 1–2 weeks (faster with online transcripts).
  • Negotiation for installment agreements or OIC: several weeks to months. OICs often take longer and require detailed financial statements.
  • Release after full payment: typically issued within 30 days of payment being posted.
  • Withdrawal consideration: varies — can take weeks. Direct-debit installment agreements expedite consideration.

In practice, expect initial phone calls and written requests to take time; keep detailed notes of all interactions (dates, names, confirmation numbers).

What to do if you need to sell or refinance immediately

  • Ask the IRS for a Certificate of Discharge for the property you need to sell. A title company or lender will often insist on this.
  • If a lender will not proceed, request subordination so the lender’s mortgage has priority. Both subordination and discharge are standard IRS collection tools to facilitate transactions while the lien remains.

Common mistakes to avoid

  • Ignoring notices. Non-response escalates collection actions and accrues more penalties and interest.
  • Assuming payment automatically removes the lien. You must confirm the IRS issues a Certificate of Release and retrieve the recorded release from the county recorder.
  • Waiting to gather records. If you believe the lien is wrong, early documentation makes protest easier.
  • Using unqualified relief firms promising instant lien removal. Only the IRS or its authorized representatives can release or withdraw an NFTL.

FAQs

  • How can I find out if the IRS filed a lien? Check county recorder’s office records where you own property, review your credit report for public-record liens, or request your account transcript from the IRS (IRS: Get Transcript).
  • Will paying my taxes remove the lien immediately? No. After payment the IRS issues a Certificate of Release of Federal Tax Lien; expect the recorded release within about 30 days after payment posts.
  • Can I challenge a lien that was filed in error? Yes. Request account transcripts and proof of assessment; if the IRS lacks documentation the lien may be withdrawn or released. Consider filing Form 12153 (a Collection Due Process request) if you want an administrative appeal for certain actions.
  • What happens if the lien is not resolved? The IRS can ultimately levy assets — bank accounts, wages, or even initiate a seizure action in extreme cases. But seizure of a residence is rare; most cases are resolved through payment plans or settlement negotiations.

Documentation checklist to prepare

  • Copies of all IRS notices (CPs and LTRs).
  • Proof of prior payments and tax returns for the years in question.
  • Recent pay stubs, bank statements, and a list of monthly expenses (for installment or OIC evaluations).
  • Property deed and title insurance information (helpful for discharge or subordination requests).

Working with professionals

A qualified enrolled agent, CPA, or tax attorney can:

  • Request and interpret your IRS transcripts.
  • Negotiate installment agreements or file an Offer in Compromise.
  • Prepare requests for withdrawal, subordination, or discharge.
    In my experience, representation is particularly valuable when appealing collection actions or submitting an OIC.

Final steps and next actions

  1. Verify the NFTL in county records and order transcripts from the IRS. (IRS: Get Transcript).
  2. Contact the IRS Collection office to confirm account details and deadlines.
  3. If you can’t pay in full, evaluate installment agreements, OIC, or professional representation.
  4. If you need to sell or refinance, request discharge or subordination promptly.

Professional disclaimer

This article is educational and not individualized tax advice. Tax situations vary; consult a qualified tax professional, enrolled agent, CPA, or tax attorney for advice tailored to your facts.

Authoritative resources

Internal links

If you want, I can draft a template letter to request lien validation or a sample collection information spreadsheet to prepare for an Offer in Compromise.