How a federal tax lien is created — timeline

  • Assessment: The IRS assesses tax after you file (or through an audit). When the tax is officially assessed, the collection clock begins. (IRS: “Understanding Tax Liens”)
  • Notice and demand: The IRS issues a notice and demand for payment. If you don’t pay or resolve the debt, the IRS has a lien by operation of law.
  • Filing the NFTL: To alert third parties, the IRS typically files a Notice of Federal Tax Lien (NFTL) in local public records. The NFTL does not create the lien — it perfects public notice and can block property sales or refinancing.
  • Collection period and expiration: The IRS’s ability to collect generally lasts 10 years from the date of assessment unless the period is extended (for example, by an installment agreement, bankruptcy, or other suspension). After that period the lien generally becomes unenforceable, but administrative steps may still be needed to clear records. (IRS guidance on collection statutes.)

Common effects and real-world impact

  • Property/title: An NFTL can cloud title and make it difficult to sell or refinance real estate. If you’re selling, the lien usually must be cleared or subordinated. See How Tax Liens Affect Property Sales and Refinancing for practical steps.
  • Credit and public records: Major credit reporting agencies removed public-record tax liens from consumer credit reports in 2017, but an NFTL remains a public record and can show up in title searches and background checks.
  • Priority vs. other creditors: A federal tax lien generally has priority over many other creditors, depending on when it’s filed.

Primary removal and resolution options

  • Pay the debt in full: The simplest route. Once paid, the IRS will issue a Certificate of Release of Federal Tax Lien and record the release in public records — usually within weeks after payment is applied.
  • Installment Agreement: Entering an approved installment agreement can stop additional collection actions. In some cases, the IRS may agree to withdraw an NFTL after you set up a direct-debit installment agreement that meets IRS criteria.
  • Offer in Compromise (OIC): If the IRS accepts an OIC, the lien will be resolved according to the OIC terms. An accepted OIC usually leads to a release or appropriate administrative filing.
  • Withdrawal of the NFTL: Withdrawal removes the public filing of the NFTL (it does not erase the tax debt). The IRS will consider withdrawal when a lien filing hinders collection or was filed in error and when the taxpayer meets specific conditions (for example, entering a qualifying direct-debit installment agreement or paying within a short window).
  • Subordination or discharge: Subordination lets another creditor take priority over the IRS for specific property (useful for refinancing). A discharge removes the lien from a particular property while leaving it on other assets.
  • Statute of limitations: If the collection statute expires (generally 10 years from assessment), the lien becomes unenforceable — but you should get formal release filings to clear records.

Practical steps to remove or mitigate a lien

  1. Verify the debt: Order an IRS account transcript and confirm the assessment, penalties, and interest.
  2. Contact the IRS early: Don’t ignore notices. Prompt contact and documentation speed resolution.
  3. Choose the right remedy: Pay in full, request withdrawal or subordination, enter an installment agreement, or submit an Offer in Compromise based on your financial situation.
  4. Submit the right paperwork: Requests for withdrawal, subordination, or discharge require specific IRS procedures; see IRS guidance and, when needed, ask a tax pro to help prepare the application.
  5. Follow up with title companies and county recorders: After the IRS issues a release or withdrawal, confirm the county records and any title reports are updated.

Mistakes I see often (from practice)

  • Waiting too long: Delay tightens the IRS’s collection leverage and increases penalties and interest.
  • Assuming the lien is gone from credit reports: Even if not on a credit file, the NFTL can block real estate transactions.
  • Trying to handle complex lien remedies without help: Requests for withdrawal, subordination, or discharge can require careful documentation; a tax attorney or enrolled agent speeds the process.

Helpful resources

  • IRS — Understanding Tax Liens (irs.gov) for official definitions and procedures. (IRS)
  • If you need step-by-step actions when a lien is filed, see Steps to Take If the IRS Files a Tax Lien Against You (internal guide).
  • For requests related to withdrawal or subordination, see Practical Steps to Request a Withdrawal or Subordination of a Tax Lien (internal guide).

(Internal links)

Final notes and disclaimer

In my practice I’ve found that quick, documented action and working with a qualified tax professional materially improve outcomes when a federal tax lien appears. This article is educational and does not replace personalized legal or tax advice. For decisions about your situation, consult a qualified tax attorney, CPA, or enrolled agent and review IRS guidance at irs.gov.