Key Insights
- A Notice of Federal Tax Lien (NFTL) is filed publicly and can appear on credit reports.
- A lien attaches to all current and future assets — including property and financial accounts.
- Lien withdrawal, subordination, and discharge are all options TaxWave pursues for clients.
- Paying in full or entering a Direct Debit Installment Agreement can trigger lien withdrawal.
What Is a Federal Tax Lien?
When you owe a tax debt and fail to pay it, the IRS can file a Notice of Federal Tax Lien (NFTL) with your local government. This public notice warns creditors that the IRS has a legal right to your property — including real estate, personal property, and financial assets.
Unlike a levy (which actually seizes your property), a lien is a claim. But it can still cause serious harm: it may appear in public record searches, limit your ability to get credit, and complicate the sale or refinancing of your home or business property.
How a Tax Lien Affects You
- Your credit report may reflect the lien, making it harder to obtain loans or refinance.
- Selling or refinancing real property becomes difficult — buyers and lenders will see the lien.
- Business assets may be tied up, affecting your ability to operate or obtain business credit.
- The lien follows all future assets you acquire until the debt is resolved.
Lien Relief Options
Lien Withdrawal
The IRS removes the lien from public records. This is possible when you pay in full, enter a Direct Debit Installment Agreement, or in certain other circumstances. Withdrawal is the best outcome — it's as if the lien was never filed.
Lien Discharge
A discharge removes the lien from a specific piece of property — useful when you need to sell or refinance real estate to pay the debt.
Lien Subordination
The IRS agrees to let another creditor move ahead of the tax lien in priority — typically used when refinancing to get better loan terms and use the proceeds to pay down the tax debt.
Lien Release
Once a tax debt is fully paid or becomes legally unenforceable, the IRS is required to release the lien within 30 days.