What Are Tax Liens, and How Can You Get Them Released?

A tax lien is a legal claim filed by the federal government (usually the IRS) or a state taxing authority when a taxpayer fails to pay assessed taxes. The lien attaches to the taxpayer’s property—real estate, personal property, and financial assets—giving the government a legal priority claim against those assets until the tax debt is resolved. Notices of Federal Tax Lien (NFTLs) are public records and can block property transfers, slow or prevent refinancing, and complicate credit applications.

Authoritative sources: see IRS guidance on the Notice of Federal Tax Lien (irs.gov) and CFPB materials on public records and credit (consumerfinance.gov).

How tax liens are created (brief timeline)

  • Assessment: The IRS or state agency assesses the tax because of a return, audit, or substitute for return.
  • Demand for payment: The agency sends a bill (a Notice and Demand for Payment).
  • Nonpayment: If the taxpayer does not pay or arrange a resolution, the agency may file a Notice of Federal Tax Lien (NFTL) to protect its interest.
  • Public record: The NFTL is filed with local recording offices and becomes public, alerting creditors and potential buyers.

In practice, the IRS does not immediately file an NFTL for every unpaid tax—filing often follows sustained nonpayment and prior collection activity. That said, once filed, the NFTL can have immediate consequences.

Common consequences of a tax lien

  • Impaired ability to sell or refinance property (title companies typically require liens cleared).
  • Worse borrowing terms or outright loan denials.
  • Damage to credit reports when judgments or public records include the lien (credit reporting rules have evolved; check current credit reporting guidance).
  • Possible enforced collection: levy, seizure, or forced sale of assets if collection escalates.

Six formal ways a tax lien can be removed, released, or mitigated

  1. Pay the tax debt in full
  • The simplest path: when the tax debt is paid, the IRS will issue a Certificate of Release of Federal Tax Lien and generally file it with the county recorder within about 30 days. You should obtain a copy of that certificate for your records and title company needs. (IRS: Notice of Federal Tax Lien)
  1. Lien becomes unenforceable (statute of limitations or other legal expiration)
  • A federal tax lien generally lasts until the underlying tax liability is paid or becomes unenforceable under the Collection Statute Expiration Date (CSED). CSED is generally 10 years from assessment, though extensions or tolling (e.g., bankruptcy, installment agreements) can lengthen that period.
  1. Discharge (certificate of discharge) for a specific property
  • You can ask the IRS to discharge the lien on a particular property so it can be sold or refinanced. This leaves the lien intact against other assets but clears the title for the specified property. Discharge requires IRS approval and documentation of the proposed sale or transaction.
  1. Subordination
  • Subordination doesn’t remove the lien but allows other creditors (like a mortgage lender) to take priority over the tax lien, which can enable refinancing or new loans. Lenders must agree and the IRS must approve.
  1. Withdrawal (Form 12277)
  • The IRS may withdraw an NFTL if withdrawal will facilitate collection or if the filing was in error. Withdrawal removes public notice that the lien was filed. Under the IRS Fresh Start initiative, qualified taxpayers who enter certain installment agreements or meet strict conditions may be eligible for withdrawal. Use Form 12277 (Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien) and follow IRS instructions. (IRS: Withdrawal of Filed Notice of Federal Tax Lien)
  1. Offer in Compromise (Form 656) or other collection alternatives
  • An accepted Offer in Compromise (OIC) resolves the liability under negotiated terms. The IRS generally releases liens when the OIC terms are fully satisfied.

Step-by-step checklist to get a tax lien released (practical actions)

  1. Confirm the lien details
  • Request a certified record from the county recorder and a transcript from the IRS (Account Transcript) to confirm assessment dates, penalties, and the exact balance. Never rely solely on a third party.
  1. Speak with the IRS or your state tax agency
  • Contact the revenue officer or the IRS collections line shown on your tax notice. Ask for specific options: full payment, installment agreement, OIC, discharge, subordination, or withdrawal.
  1. Evaluate your best path
  • Full payment if possible — fastest route to a release (Certificate of Release recorded within ~30 days).
  • Installment agreement — you may still have the NFTL recorded; consider requesting subordination or withdrawal if you need to refinance.
  • OIC — useful if you can demonstrate inability to pay the full amount; processing can take 6–12 months.
  1. File required IRS forms
  • Offer in Compromise (Form 656) and Collection Information Statements (Forms 433-A, 433-B or 433-F) when relevant.
  • For withdrawal, use Form 12277 and include documentation showing withdrawal will aid collection or that filing was erroneous.
  1. Follow up and obtain written proof
  • After payment or approved resolution, request the Certificate of Release or a confirmation of withdrawal in writing. Check local property records to ensure the release is recorded.
  1. Clean up credit and title issues
  • Provide recorded releases to credit bureaus, title companies, and lenders as needed. If a lien was reported on a credit file in error after a release, dispute the listing with the bureau and attach proof of release.

Timelines you can expect (typical, not guaranteed)

  • Full payment to recorded release: often within 30 days of payment, but timing depends on county recorders and IRS processing.
  • Form 12277 withdrawal decision: variable; some withdrawals are quick if the case is straightforward, others take longer.
  • Offer in Compromise processing: often 6–12 months depending on case complexity and IRS backlog.

Common mistakes I see in practice

  • Assuming payment alone clears all records. You must receive the IRS Certificate of Release and confirm it’s recorded.
  • Waiting too long to communicate with the IRS. Early, transparent communication preserves options.
  • Using unvetted “fixers” who promise instant removal — there’s no lawful shortcut to bypassing the IRS process; legitimate options are formal and documented.

In my practice I’ve helped clients who thought a paid lien would automatically vanish from title records. We needed to request and confirm the formal Certificate of Release and, in one case, file a quiet title action to clear an old, improperly recorded lien.

When to get professional help

  • The lien covers complex or valuable property (commercial real estate, transfers, estates).
  • You face enforced collection (levy, seizure) or a notice of intent to levy.
  • You need an Offer in Compromise or complex negotiation (multiple tax periods, business tax debts).

A qualified tax attorney, CPA, or an enrolled agent who represents taxpayers before the IRS can negotiate, prepare OICs, and request withdrawals correctly. In my experience, paying for experienced representation often speeds resolution and avoids costly mistakes.

How state tax liens differ

State tax agencies have their own lien processes and forms. A federal release does not automatically remove state or local tax liens — check state revenue department rules and forms.

Useful authoritative links and internal resources

Related FinHelp guides:

Quick FAQs

Q: Will paying a lien immediately fix my credit and title?
A: Paying begins the release process, but you must confirm a Certificate of Release is recorded; credit reporting corrections can take time.

Q: Can the IRS take my house if I have a tax lien?
A: A lien alone is a claim; enforced sale or seizure generally requires separate collection action (levy/forced sale) which is less common on primary residences but possible depending on circumstances.

Q: Is there a cost to file for withdrawal or discharge?
A: No IRS filing fee for Forms like 12277, but you may have professional fees if you hire representation.

Professional disclaimer: This article is educational and does not replace personalized tax or legal advice. For advice tailored to your facts, consult a tax attorney, CPA, or enrolled agent. Procedures and timelines described reflect IRS guidance current as of 2025 but are subject to change—always verify with up-to-date IRS resources.