Federal Tax Lien: What It Is, How It Affects You, and How to Remove It
A federal tax lien is the government's legal claim against everything you own — property, financial assets, and future assets. Once filed, it is publicly recorded and follows you until the debt is resolved or expires.
What Is a Federal Tax Lien?
A federal tax lien arises automatically when the IRS assesses a tax, sends a notice and demand for payment, and the taxpayer fails to pay within 10 days. The lien attaches to all current and future property and rights to property. The IRS files a Notice of Federal Tax Lien (NFTL) publicly with state and county records to establish priority against other creditors.
How a Tax Lien Affects Your Property
A lien on real property means you cannot sell or refinance your home without the IRS's participation — the proceeds must be used to pay the lien first. For business assets, a lien can complicate financing, equipment purchases, and investor relationships. A lien on financial assets affects your ability to open credit lines and can freeze account openings at some financial institutions.
Tax Liens and Your Credit
Although the major credit bureaus (Equifax, Experian, TransUnion) removed tax liens from credit reports in 2018, tax liens are still publicly recorded in county records and are visible to title companies, lenders, and anyone doing a public records search. Mortgage lenders always check for federal tax liens before closing.
How to Get a Tax Lien Released
The IRS releases a lien within 30 days of: full payment of the debt, acceptance of an OIC and payment of the agreed amount, or posting of an accepted bond. A lien release does not mean the lien is withdrawn — a withdrawal is a separate process that removes the public record entirely and is available under specific conditions.
Lien Discharge and Subordination
Even without full payment, the IRS can issue a Certificate of Discharge (removing the lien from specific property, useful when selling a home with equity), or a Certificate of Subordination (lowering the IRS's priority position to allow a new lender to take first position, useful for refinancing). Both require formal application and negotiation.
Real-World Example
A contractor in Burbank tried to refinance his home to consolidate business debt and discovered a $67,000 federal tax lien from 2019. The lien blocked the refinance. We submitted a request for a Certificate of Subordination, allowing the new lender to take first position while the IRS moved to second. The refinance closed, he paid $28,000 toward the lien from the proceeds, and we established an installment agreement for the remainder.
Tax Lien Help in Burbank and LA County
Federal tax liens require strategic handling. Calculus Tax, Inc. helps taxpayers in Burbank, Los Angeles, and throughout LA County navigate lien releases, withdrawals, discharges, and subordinations. Call (310) 598-3759 or visit 1050 W. Alameda Ave., Burbank, CA 91506.
Frequently Asked Questions
How long does a federal tax lien last?
A federal tax lien lasts until the tax debt is paid, settled, or the 10-year collection statute expires. The IRS can refile the lien before expiration to extend it further.
Can I sell my house with a federal tax lien?
Yes, but the lien must be addressed at closing. If the sale proceeds are sufficient to cover the lien, the IRS will release it at closing. If not, you may need to request a Certificate of Discharge.
What is a lien withdrawal vs. a lien release?
A release means the lien is paid off but the record of the filing remains. A withdrawal removes the NFTL from public records entirely, as if it was never filed. Withdrawal is available under certain conditions including entering a direct debit installment agreement.
Can the IRS file multiple liens against me?
Yes. The IRS can file a new NFTL for each tax year with an unpaid balance. Multiple liens from multiple years can appear in public records simultaneously.
Does a tax lien survive bankruptcy?
In most cases, yes. Tax liens attach to property that existed before bankruptcy and generally survive the bankruptcy discharge. The underlying tax debt may be discharged, but the lien against pre-bankruptcy property remains.
Can I buy a house with a federal tax lien?
You can purchase a home, but the lien will attach to the new property immediately. Most title companies will require the lien to be resolved before issuing title insurance.
Federal Tax Lien: What It Is, How It Affects You, and How to Remove It Services in Los Angeles
Calculus Tax, Inc. provides federal tax lien: what it is, how it affects you, and how to remove it services to individuals and businesses throughout Los Angeles County. Our licensed CPAs are based in Burbank and serve clients in Burbank and surrounding communities.
Our Burbank office serves clients throughout Los Angeles County including Los Angeles, Long Beach, Santa Monica, Glendale, Burbank, and more.
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