How Tax Liens Are Recorded and How to Get Them Withdrawn

How tax liens are recorded and how you can get them withdrawn

Tax liens are one of the most consequential collection tools available to federal, state, and local governments. They don’t just reflect an unpaid balance — they can block sales, complicate refinances, and raise alarms for buyers and lenders. Below I explain, from a practical, tax-practitioner perspective, how liens are recorded and the realistic paths to getting them withdrawn or otherwise resolved. I’ve worked with clients who successfully removed liens by paying, negotiating, or proving filing errors; I’ve also seen avoidable delays when taxpayers assumed a lien disappeared automatically after payment.

Sources and legal background

• Internal Revenue Service (IRS): Notice of Federal Tax Lien and Withdrawal guidance — see the IRS pages on Notice of Federal Tax Lien and Withdrawal of a Filed Notice of Federal Tax Lien (irs.gov).
• Consumer Financial Protection Bureau (CFPB): explains how liens affect credit and home sales (consumerfinance.gov).

Note: This article is educational and not legal or tax advice. Consult a tax attorney, CPA, or enrolled agent for case-specific guidance.

1) How a lien comes into existence and why recording matters

• Federal tax liens: Under federal tax law the government’s lien arises when a tax is assessed and the IRS has made a demand for payment. The lien becomes publicly enforceable against third parties only after the IRS files a Notice of Federal Tax Lien (NFTL) in local public records — usually the county recorder or land records office. Filing (also called recording or perfecting the lien) places other creditors and prospective buyers on notice that the government claims an interest in the taxpayer’s property; see the IRS NFTL guidance.

• State and local tax liens (property taxes, state income, sales taxes): These are handled under state law. Most counties record property tax liens or certificates in the land records or with the county treasurer. Unpaid property taxes may later lead to tax sale/foreclosure depending on state and local rules.

Why recording matters: an unrecorded lien can still exist legally, but it is far harder for the government to assert priority over other creditors or to affect third-party transactions until it is filed. When the lien is recorded, title searches will reveal it, which commonly stops closings and refinancing.

2) Typical recording process (federal and local)

Federal NFTL (practical steps):

1. IRS assessment and notice: IRS assesses the tax and sends bills and notices. If the taxpayer does not resolve the debt, the IRS may prepare and file a Notice of Federal Tax Lien.
2. Filing: The IRS records the NFTL in local public records — generally the county recorder or clerk where the property is located. The NFTL identifies the taxpayer and the amount owed.
3. Public effect: The NFTL is discoverable in title searches and public-record searches, alerting title companies and lenders.

Local/state property tax lien (practical steps):

1. County/town assessment and billing: The county treasurer or tax collector issues a property tax bill and, if unpaid after deadlines, reports the delinquency.
2. Recordation: Depending on jurisdiction, the county records a tax lien or eventually posts the property for tax sale.
3. Redemption period and enforcement: Most jurisdictions have a redemption period; if unpaid, the property can be sold at auction or foreclosed by the taxing authority.

Because rules differ by state and county, always check your county treasurer/recorder’s website or call their office to confirm steps, deadlines, and redemption rights.

3) How withdrawal, discharge, and subordination differ (short primer)

• Withdrawal: A withdrawal removes the public Notice of Federal Tax Lien from the recorder’s files. It is not the same as full satisfaction of the tax debt — it simply removes the public filing. The IRS will withdraw an NFTL in limited situations (e.g., filed in error, or withdrawing is in the best interest of efficient tax collection), and after certain payment terms are met in some installment agreements.

• Discharge (or Certificate of Discharge): This clears a specific property from the lien’s reach — useful when you want to sell or refinance one property but the lien remains against other assets.

• Subordination: This changes the lien’s priority in favor of a lender so you can obtain mortgage financing even though the lien remains in place.

(See our deeper discussion of differences: Tax Lien Withdrawal vs. Discharge: What’s the Difference? https://finhelp.io/glossary/tax-lien-withdrawal-vs-discharge-whats-the-difference/)

4) How to get a federal tax lien withdrawn — practical, step-by-step

1. Verify the lien exists and get a payoff or verification

• Order an IRS account transcript or contact the IRS lien unit for the taxpayer’s account. You or your representative can request payoff information and exact amounts (tax, penalties, interest, and fees). IRS guidance: “Notice of Federal Tax Lien” and withdrawal procedures.

1. Confirm the reason for withdrawal eligibility
   Typical reasons the IRS will consider a withdrawal include:

• The NFTL was filed in error (wrong taxpayer, duplicate filing, wrong property).
• Withdrawal is in the best interest of efficient tax administration (for example, withdrawing the NFTL to allow a sale where full payment will be made at closing).
• The taxpayer entered into an installment agreement that meets IRS criteria where withdrawal of the NFTL is appropriate.

1. Gather documentation

• Proof of full payment or proof of an approved agreement.
• Title/closing statements if withdrawal would clear a sale or loan.
• Correspondence showing the NFTL was filed in error if applicable.

1. Request withdrawal from the IRS lien office

• Contact the IRS Office of Appeals or the local IRS lien office as directed on the IRS webpage for withdrawals. You or your authorized representative (power of attorney) should submit supporting evidence and a written request explaining why withdrawal is appropriate.

1. Follow up with county recorder and title company

• After the IRS issues a withdrawal, you must confirm the county recorder actually removed the NFTL from public records. Some counties take additional clerical steps, and you may need to provide the withdrawal record or a certified copy.

1. Confirm the effect on mortgages and title

• Even after withdrawal, lenders or title companies may request an updated title search or a formal lien release or Certificate of Discharge/Release. Work with your closing agent or lender to ensure they accept the withdrawal paperwork.

Practical timelines: The IRS processing timeframe and county posting times vary. In many cases the IRS will process a valid withdrawal request in several weeks, but county records updates can add more time. Always obtain written confirmation from the IRS and the recorder.

5) Other paths to remove liens or limit their effect

• Pay in full: Paying the tax debt typically leads to a Certificate of Release (or similar instrument) that is recorded; this shows the lien is satisfied. Keep all receipts and the release document.

• Subordination or discharge for a specific property: If you need to refinance or sell a single property, request a discharge or subordination from the IRS (often used with lenders during closings).

• Offer in Compromise or settlement: In limited cases you may settle the tax debt for less than full amount. If accepted, the IRS will issue documentation showing the disposition of the lien.

• Prove filing error: If the lien was filed against the wrong taxpayer or duplicate filings were made, the IRS can withdraw or correct the filing.

If your case is complex (multi-year payroll taxes, corporate collections, or contested liability), consult a tax attorney or enrolled agent. See our related guide: Options When the IRS Files a Notice of Federal Tax Lien https://finhelp.io/glossary/options-when-the-irs-files-a-notice-of-federal-tax-lien/ and information on withdrawing a federal tax lien https://finhelp.io/glossary/withdrawal-of-federal-tax-lien/.

6) How liens affect credit and closings (what to expect)

• Credit reports: Since 2017, the three major credit bureaus generally stopped including most public-record tax liens and civil judgments in consumer credit reports. However, a recorded lien can still derail a real estate closing, because title searches and lender underwriting rely on county records and their own searches (CFPB explains consumer effects).

• Closing and refinancing: Title companies typically will not insure a clear title unless the lien is resolved, subordinated, or discharged for the property involved. Lenders want to ensure they have a first lien position.

7) Common mistakes and how to avoid them

• Mistake: Paying a tax bill without getting a written release. Always obtain the IRS or county’s written confirmation and verify recording.
• Mistake: Assuming a withdrawn lien clears the tax debt. Withdrawal just removes the public filing — the underlying tax may still be owed unless paid or settled.
• Mistake: Ignoring state rules. Property tax foreclosures and redemption periods are controlled by state/county law — don’t rely on federal procedures for local property tax issues.

8) Documents to keep and next steps

• Keep: payoff statements, IRS correspondence, the withdrawal or release document, county recorder confirmation, and any title company communications.
• Next steps: If you need help, hire a tax professional with lien experience. If you’re buying or selling property, work closely with the title company and your lender to confirm required paperwork.

Where to find authoritative help

• IRS: Notice of Federal Tax Lien and Withdrawal pages at irs.gov (search “Notice of Federal Tax Lien” and “Withdrawal of a Filed Notice of Federal Tax Lien”).
• CFPB: consumerfinance.gov for consumer-facing explanations of public-record liens and credit effects.
• Local county treasurer or recorder office: for specific state or county procedures and redemption timelines.

Professional note: In my 15+ years advising clients on tax collection issues, timely communication with the taxing authority and immediate documentation collection are the most reliable ways to avoid last-minute obstacles at closings. A proactively requested subordination or discharge often resolves financing problems faster than waiting for a full payoff.

Disclaimer: This content is for educational purposes only and does not replace professional legal or tax advice. Laws and administrative procedures change; check the IRS and your state or county offices for current rules.