Jump to Navigation
Over 30 Years of Experience handling tax controversies & tax disputes

Tax liens, part 2: How do you clear up a federal tax lien?

In the first part of this post, we discussed several possible responses to a federal tax lien.

One option, as we noted, is to resolve the underlying tax debt through an offer in compromise or an installment agreement before you are hit with a tax lien. It is also possible to contest the validity of the debt itself.

In this part of the post, let's turn our attention to how to clear up a lien after it has been imposed.

"Clearing up" a lien is certainly not a legal term. Neither is "getting rid of." There are several terms in tax law with more specific meanings that apply to tax liens.

Let's start with the term "subordination." To subordinate a federal tax lien doesn't mean it goes away. It means the IRS has agreed to let other creditors have priority over the federal government.

It is also possible to "discharge" a lien. This involves talking the lien away from particular property. This could also be called removing the lien from that property.

Neither subordination nor discharge actually releases the lien. But such a step can make it easier for you to refinance your house or get access to credit for your business -- even though there is still a lien on your property.

What about actually getting the lien released or getting the IRS to withdraw it?

That can be a bit more difficult, especially if you don't have the money to pay off your tax debt.

You can apply for the "withdrawal" of a Notice of Federal Tax Lien (NFTL) by using the applicable form. Withdrawal means that the NFTL goes away, but you remain on the hook for the tax debt.

In recent years, as part of its Fresh Start program, the IRS has opened up more eligibility options for lien withdrawal. We will explore those further in an upcoming post.

For purposes of today's post, the key point is that there are several ways that a federal tax lien can be addressed. A knowledgeable tax attorney can counsel you on which response is best for your specific situation.

No Comments

Leave a comment
Comment Information
Have a Question? Ask an Attorney:

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Visit Our
Tax Law Website
Contact Information

Levins Tax Law, LLC
1671 Worcester Road, Suite 304
Framingham, MA 01701

Framingham Law Office Map

Levins Tax Law, LLC
38 Newbury Street, 6th Floor
Boston, MA 02116

Boston Law Office Map
By Appointment Only

Phone: 508-435-0118
Toll-Free: 888-333-9501
Fax: 888-333-0291