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Do IRS Tax Liens Ever Expire?

Owing the IRS is never fun. Not only is it stressful, but it can also have adverse impacts on your personal and professional life. That’s because the IRS won’t hesitate to file a tax lien against your property if you don’t pay your bill on time. And it will only get worse if you continue to ignore payment requests. Thankfully, the IRS does have a time limit on how long it can hound you for back taxes. To learn more about tax liens and their expiration dates, keep reading.

When Can The IRS File a Tax Lien?

The IRS won’t file a tax lien until several conditions are met.  First, you must neglect or refuse to pay your taxes on time. Once this happens, the IRS will assess your tax liability and send you a Notice and Demand for Payment. This notice officially puts your unpaid taxes on the books and explains how much you owe, including interest and penalties. If you don’t pay your tax debt after receiving your first bill, unfortunately, a federal tax lien may automatically be put in place. In many cases, the IRS will also file a Notice of Federal Tax Lien (NFTL) in the public records.

Generally, the IRS won’t file a tax lien if you owe less than $10,000, but it still reserves the right to file to protect its interests, if needed.

How Do I Know If There’s a Tax Lien Against Me?

Once an NFTL is filed, the IRS will send you a Notice of Your Right to a Collection Due Process Hearing. If you want to request a hearing with the Office of Appeals, you must do so before the deadline date indicated on the notice. You can also call the IRS Centralized Lien Operation at 800-913-6050 to verify a lien.

IRS Tax Lien Consequences

Once the IRS files a Notice of Federal Tax Lien, it can impact several aspects of your life, including:

  • Assets – An IRS tax lien attaches to all of your assets, current and future. This may include, but is not limited to, real estate, vehicles, and securities.
  • Credit – Although a lien won’t impact your credit score, it can limit your ability to acquire new loans and other credit.
  • Business – If you own a business, the lien attaches to all business property, including accounts receivable.
  • Bankruptcy – Your tax debt, lien, and NFTL may remain in place even after you file for bankruptcy.

It’s important to note that a lien is not a levy. Liens merely secure the government’s interest in your property when you owe back taxes. A levy allows them to seize your assets to pay your tax debt.

Do IRS Tax Liens Expire?

The IRS has a limited number of years to collect your back taxes. In most cases, the statute of limitations is 10 years. This timeframe, however, can be extended under certain circumstances. When this happens, the IRS must refile the lien within 30 days of the original expiration date to keep it in place for the extended collection period.

For example, if you submit an Offer in Compromise (OIC), collections are suspended while the IRS reviews your request. If your OIC is rejected, however, that time is added back. It essentially extends your original statute of limitations deadline by the number of days your account was in a non-collection status.

Options For Dealing With a Tax Lien

The IRS generally won’t release a lien until you’ve paid your tax debt in full or it’s no longer legally allowed to collect your back taxes. There are certain instances, however, when the IRS may withdraw an NFTL before your taxes are paid in full.

  1. The IRS didn’t follow proper procedures.
  2. Withdrawing the lien will help you pay your tax debt faster.
  3. The lien was filed during a bankruptcy automatic stay period (non-collection status).
  4. You entered into a Direct Debit Installment Agreement and meet all of the following requirements:
    • You owe less than $25,000.
    • The agreement will be paid in full within 60 months or before the statute of limitations expires, whichever is earlier.
    • You’ve made three (3) consecutive direct debit payments.
    • You’re in full compliance with other filing and payment requirements.
    • You haven’t defaulted on any current or previous Direct Debit installment agreement.

The IRS may also discharge a lien (remove it) from specific property. This is typically done when you plan to sell the property and use the proceeds to satisfy your tax debt. You may also request subordination if you are planning to apply for a loan or mortgage. Subordination doesn’t remove the lien but can make it easier to get credit.

Need Tax Lien Help?

If you owe the IRS and are worried that it may file a Notice of Federal Tax Lien, now is the time to take action. At Tax Defense Network, we can work with you to find the right solution for your situation. Whether it’s negotiating with the IRS to lower your tax bill (Offer in Compromise) or getting you set up in an affordable payment plan, our tax professionals will work hard to get you the best resolution and keep the IRS from levying your assets. To find out how we can help you, call 855-476-6920 for a free consultation and quote.