Immediate steps to take

  • Read the notice carefully and note dates: you typically have 30 days from the filing to request a Collection Due Process (CDP) hearing (see IRS guidance) (https://www.irs.gov/businesses/small-businesses-self-employed/irs-federal-tax-lien).
  • Don’t ignore mail from the IRS. Opening and responding quickly preserves options.
  • Gather documents: tax notices, account transcripts (obtainable via IRS.gov), proof of income and expenses.

Practical resolution options

1) Pay in full — fastest way to clear the lien

  • Paying the full assessed balance causes the IRS to issue a Certificate of Release of Federal Tax Lien. Request the release once payment posts.

2) Installment Agreement

  • Set up a payment plan to bring accounts current. Many taxpayers qualify for online or streamlined agreements; a plan does not automatically remove the lien but can lead to later relief (Form/requirements vary; see IRS online resources).

3) Offer in Compromise (OIC)

  • If you can’t pay in full, an OIC lets you settle for less than the full tax liability if you meet strict criteria (IRS Offer in Compromise program, Form 656). In my practice I’ve found OICs work best when collection potential is truly limited and documentation is solid.

4) Currently Not Collectible (CNC)

  • If paying would create severe financial hardship, the IRS may suspend collection activity. CNC can halt levies but usually leaves the lien in place.

5) Administrative remedies: Withdrawal, Subordination, Discharge, Release

  • Withdrawal removes the public Notice of Federal Tax Lien from credit reports when strict criteria are met (not a forgiveness of debt). See practical steps to request withdrawal or subordination for details: Request withdrawal or subordination.
  • Subordination allows other creditors to move ahead of the IRS lien so you can refinance or sell property more easily.
  • Discharge of property removes the lien from specific property (for example, to allow sale or refinancing). For timing and procedures, see our piece on releasing a federal tax lien.
  • Release (Certificate of Release) is issued when the tax is fully paid or the statute of limitations expires.

6) Appeal and legal options

  • Request a CDP hearing within the required timeframe to challenge the lien or propose alternatives (Form 12153 to request an appeal). Appeals can stop enforcement while the matter is reviewed (IRS Collection Due Process information).
  • In bankruptcy, liens behave differently depending on chapter and case details. Consult a bankruptcy attorney if filing is under consideration.

Consequences and real-world impact

  • Public record and credit: A filed lien can appear in public records and may affect lenders’ willingness to extend credit and title searches during home sales or refinancing.
  • Title and closings: A lien can complicate property sales; using subordination or discharge is common in sale/loan scenarios (see how liens affect property transactions: How Federal Tax Liens Affect Credit and Property Transactions).

Practical tips I use with clients

  • Act quickly: response windows (appeals, CDP) are short. Missing a deadline limits options.
  • Document everything: keep proof of payments, correspondence, and IRS account transcripts.
  • Use the right remedy: I often start by assessing solvency — can the client pay or is an OIC/CNC more appropriate?
  • Work with professionals: a CPA or tax attorney can speed negotiations and avoid procedural errors.

Common mistakes to avoid

  • Ignoring mail or delaying response.
  • Assuming negotiation is impossible — the IRS routinely accepts installment agreements, OICs, or CNC statuses when justified.
  • Failing to request a CDP hearing if you want to dispute filing or collection actions.

Key IRS resources

When to get professional help

If the lien affects a sale, refinancing, or you’re considering bankruptcy, consult a tax attorney or CPA experienced with tax liens. In my 15+ years working with clients, early engagement of a professional helps preserve options and speeds resolution.

Disclaimer

This article is educational and does not constitute legal, tax, or financial advice. For guidance tailored to your situation, consult a qualified tax professional or attorney.