A lien is different from a levy. A levy takes your property or assets, where a lien secures the government’s interest in your property.
A federal tax lien is a legal claim to your property (such as real property, securities and vehicles), including property that you acquire after the lien arises.
If the IRS files a lien against your business, it attaches to all business property and to all rights to business property, including accounts receivable.
A lien is just one of the collection procedures the IRS may use if you file or pay your taxes late. Publication 594, The IRS Collection Process, helps you understand the entire IRS collection process.
A federal tax lien arises automatically if you don’t pay the amount due after receiving your first bill. The government also may file a Notice of Federal Tax Lien (NFTL) in the public records.
Generally, within five business days of filing the NFTL, the IRS will send you a Notice of Your Right to a Collection Due Process Hearing. You’ll have until the date shown on the notice to request a Collection Due Process (CDP) hearing with the Office of Appeals. See Publication 1660, Collection Appeal Rights, for a full explanation of the CDP process. At the CDP hearing, you may raise many issues which include proposing another way to pay your debt, and in some cases, to contest the debt itself.
Once a lien arises, the IRS generally can’t release it until you’ve paid the tax, penalties, interest, and recording fees in full or until the IRS is no longer legally able to collect the tax. However, in certain circumstances, explained below in the What should I do? section, a lien may be withdrawn, discharged, or subordinated.
The IRS will release the lien once you pay the debt – either in a lump sum or over time. However, if the IRS releases a lien, it may remain on your credit report for many years. A lien withdrawal, discussed below, however, removes the lien from your credit report.
If the Notice of Federal Tax Lien (NFTL) included on your credit report is causing you a problem, you can apply to have the notice withdrawn if you meet any of the criteria listed below. This means it’ll be removed from your credit report, as if the lien had never occurred.
