How Long Does an IRS Tax Lien Last?

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  • An IRS tax lien lasts for 10 years, or until the statute of limitations on your tax debt expires.
  • You can take other steps to get the lien removed, such as repaying the debt or entering into a payment plan.
  • If you do not resolve your tax debt once you have received a notice of lien, your property could be seized to satisfy your IRS liability.

The IRS places a federal tax lien on your property if you do not attempt to resolve unpaid tax debt. The lien is a public record that allows the agency to seize bank accounts, wages, homes, and other assets to settle your balance.

How long does an IRS tax lien last? This document automatically expires ten years after the tax assessment date for the debt in question. After ten years, the statute of limitations runs out and the IRS can no longer attempt to collect this debt.

How Long Does an IRS Tax Lien Last?

Understanding Your Notice of Federal Tax Lien

When your past-due tax account is subject to a federal tax lien, you will receive a document titled Notice of Federal Tax Lien. This notice details:

  • The type of tax debt you owe
  • The years in which the debt in question was assessed
  • The date when the balance was assessed
  • The amount of the balance, not including penalties and interest that will be assessed
  • The last date on which the lien can be refiled
  • The last four digits of your Social Security number

When the IRS issues a tax lien, this document enters public record and gives the federal government claim to your assets and future wages. The lien is attached to all your property, including bank and investment accounts, any vehicles, real estate, or valuable items you own, as well as accounts receivable if you own a business.

When you sell property that is under an IRS lien, the government will receive the sale proceeds first. Once your tax balance is settled, you will receive any remaining funds. If the sale doesn’t cover your full debt, the lien will remain on your other assets.

Although the IRS has the right to seize your property, this action is not taken unless you fail to take steps to resolve your tax debt after you receive a Notice of Federal Tax Lien.

In most cases, a lien is not filed for tax debts under $10,000. For this reason, consider paying down your balance to below $10,000 if you are not able to pay the full amount.

The Length of a Tax Lien

A federal tax lien is self-releasing. That means when ten years passes, it automatically expires. This provision is contained directly in the language of the lien:

“IMPORTANT RELEASE INFORMATION: For each assessment listed below, unless the lien is refiled by the date given in column (e), this notice shall, on the day following such date, operate as a certificate of release as defined in IRC 6325(a).”

However, few taxpayers opt to wait out the statute of limitations. If you purchase property or earn money during that 10-year period, it can be seized by the IRS to repay the debt. A tax lien also makes it very difficult to get credit, including mortgages and other types of loans.

If you take steps to resolve your tax debt, such as submitting an offer in compromise to settle your account for less than you owe, appealing an IRS decision, or enrolling in an installment agreement, the expiration date on your debt is extended. If this occurs, the IRS can refile your lien within 30 days of the original expiration date and it will last until the new expiration date.

Getting Rid of an IRS Tax Lien

Even after the IRS cancels a tax lien on your account, it will still remain on your credit report for up to ten years. This black mark can make it difficult to qualify for loans, mortgages, and other types of credit. However, you can make a formal request to the IRS to have the lien information officially withdrawn from your credit report by filing IRS Form 12277. To qualify, you must:

  • Completely repay the debt associated with the lien or have an accepted offer in compromise that has been satisfied. Once you do this, the IRS will release the lien within 30 days.
  • Be in compliance with all tax returns and filings for the past three years
  • Remain on time with current and future tax payments

If you are not prepared to pay off your tax liability immediately, you can also have a lien removed if you have entered into a payment plan.

The IRS may agree to withdraw your tax lien from specific property. For example, if you want to refinance your mortgage in order to repay all or part of your tax debt, the IRS may agree to discharge the lien so you can do so.

The agency may also subordinate the lien, which means it will allow another creditor to move into its preferred position so that you are able to get a loan. Like lien discharge, the IRS will only take this step if it puts it in an advantageous position to collect your tax debt.

Establishing a Payment Plan

Taxpayers can avoid an IRS tax lien by requesting an installment agreement. This agreement allows you to repay your tax liability over time with monthly payments. You are eligible for this program if:

  • You owe less than $25,000 in federal income tax, penalties, and interest.
  • You are up to date on all your tax filings.
  • You can pay off the full balance within 60 months.
  • You have not defaulted on a previous installment agreement.

To apply, complete and submit IRS Form 9465. You can do this online or print a copy and mail it with your tax return.

When you have an IRS tax lien, you need to take action to avoid further collection actions. If you’re not sure what to do next, Solvable can help. We’ll match you with highly rated debt relief companies with extensive experience helping those who are struggling with tax debt.

 

Andrea Miller
Author:
Andrea Miller

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