You open a letter from the IRS and see the words “federal tax lien.” Your first thought may be your home: can you keep it, sell it, or refinance?
Start with this distinction: a lien is a legal claim against property. A levy is the action that takes property. A lien notice does not, by itself, mean the IRS has taken your home. IRS: Understanding a federal tax lien
First, get the notice in front of you
You do not need to know all the terminology before asking for help. Gather the letter, any other recent IRS notices, and a short explanation of what you need to do next.
Are you trying to stay in your home? Is a sale already under contract? Are you applying to refinance? Start the conversation there.
Check the response date on the notice, too. There may be a right to request a hearing about the lien filing. The Taxpayer Advocate Service explains that deadlines and available appeal routes depend on the notice and circumstances. TAS: Collection Due Process
Can I still sell or refinance?
A lien needs to be addressed as part of the transaction. It does not mean there is only one possible outcome.
The IRS explains that, when a home has equity, some or all of the tax debt may be paid from the sale proceeds at closing. A request to discharge the lien from that property may be an option in other circumstances. For refinancing, the IRS may agree to put another lender ahead of its claim. Approval is not automatic. IRS: A federal tax lien on your home
What do the different options mean?
These terms describe different things:
- Release: ends the lien. Paying the tax debt in full is one route.
- Discharge: removes the lien from a particular property.
- Subordination: leaves the lien in place but allows another creditor ahead of the IRS.
- Withdrawal: removes the public notice. It does not, by itself, erase the amount you owe.
Which option fits depends on your situation and the applicable requirements. IRS: Lien options
Will it damage my credit?
There is an important distinction between a credit report and the ability to borrow.
The CFPB reported that tax liens had been removed from the three nationwide credit reporting companies’ consumer reports by April 2018. That does not mean the public lien disappears. The IRS says a filed notice may still limit access to credit. CFPB: Public-record removal, IRS: How a lien affects you
Start with a conversation
At IRS Help, you do not have to arrive knowing which form or solution to ask for. Tell us what the letter says and what you are worried about.
Book a free 30-minute consultation with IRS Help. Bring your notice and your questions. No pressure, no judgment.
General information about federal tax liens. The right next step depends on your notice and circumstances.
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