Legal Disclosure    Advertiser Disclosure

What Is the Federal Tax Lien Statute of Limitations and Other FAQs

Published March 7, 2022   |   5 min. read

Gerri Detweiler
Gerri Detweiler focuses on helping people understand their credit... Read More
47 comments

Owing the IRS money can be scary. So if you’re potentially facing IRS collections, you may wonder what the consequences could be. One possibility is a federal tax lien. Find out more below about this option the IRS can exercise, including what the federal tax lien statute of limitations is. Here’s what you need to know:

What Is a Federal Tax Lien?

A tax lien is a legal claim that says you owe money to the government and it has a right to your property if you fail to settle upon the debt related to your taxes. For example, if you have an active tax lien, it may assert the government’s right to assets related to your home. If you sell your home for a profit of $10,000 and you owe that much in taxes, the lien means the IRS will be paid first—before you receive any of the proceeds.

Tax liens are public notices, so they’re searchable and on record. They aren’t, however, equivalent to a seizure. They don’t mean the IRS will immediately or, potentially, ever seize your property. It just puts the government in legal line for assets should you sell your property.

When Does the IRS File a Tax Lien?

The IRS doesn’t default to filing a lien just because you owe money. According to its website, a series of conditions must be met first:

  • You must owe money and the IRS must put it officially on the books. Typically, when you owe money, the IRS sends you a notice of that fact and you have time to dispute it. So, as long as you’re vigilant and answer IRS correspondence appropriately, you shouldn’t end up with a lien for taxes you don’t owe.
  • The IRS must send you a Notice and Demand for Payment. This is a tax bill that details what you owe and why. Again, you can dispute the amount if you believe it’s inaccurate, but pay attention to deadlines listed in the letter. You typically have only a certain time to do so.
  • You must refuse or otherwise neglect to make the payment in a timely manner. The IRS doesn’t say how much time it provides, but it does indicate it won’t file a lien immediately.

How Do You Know If You Have a Tax Lien?

The IRS sends a notice of intent to file a lien or a notice of a lien. It uses different forms depending on the situation, including:

  • Notice of Federal Tax Lien Filing and Your Right to a Hearing
  • Final Notice—Notice of Intent to Levy and Notice of Your Right to a Hearing
  • Notice of Jeopardy Levy and Right of Appeal
  • Notice of Levy on Your State Tax Refund—Notice of Your Right to a Hearing
  • Notice of Levy and of Your Right to a Hearing

You can also call the IRS’s Centralized Lien Operations number to verify if you have a lien. That number is 1-800-913-5060.

What Actions Can the IRS Take After a Lien?

Once a lien is in place, the IRS has a legal right to some of your assets. Some things it could potentially do include:

  • Seize profits from the sale of assets such as homes or cars
  • Seize actual assets and force a sale, though this is not nearly as common
  • Seize your bank accounts 
  • Garnish or seize part of your wages

Can States File a Tax Lien?

States have their own collection procedures, but yes, they can file liens as well. If you owe state taxes or property taxes or have other delinquent taxes, seek advice from a tax expert. Lien policies vary by state, as do state lien statutes of limitations. 

Is There a Federal Tax Lien Statute of Limitations?

Yes, there is a statute of limitations. Unless action is taken by the IRS to refile a lien, federal tax liens typically expire 30 days after the tenth anniversary on which they were placed. For example, if a tax lien is filed on December 1, 2021, it would expire on December 31, 2031. 

Does a Tax Lien Impact Your Credit Score?

No, tax liens don’t impact your credit score directly. They used to show up on credit reports, but the credit bureaus decided to change that. Certain public records, including liens, don’t currently show up on credit reports.

However, if you owe a lot in taxes and are trying to settle the debt, that could impact your credit score in other ways. You might max out credit cards making tax payments or fail to make other debt payments in a timely manner as you juggle your finances. As you deal with taxes, consider signing up for ExtraCredit to keep an extra-close eye on your credit score and help manage your overall financial situation as positively as possible.

And if you’ve already stumbled into some negative activity that lowers your credit score, consider credit repair options to improve it in the future.

Can You Settle a Tax Debt and Get a Lien Released?

According to the IRS, if you pay your tax debt in full, it will release your lien within 30 days. You might also work with the IRS to:

  • Settle the debt by paying part of what you owe.
  • Have the IRS withdraw the lien with the understanding that you still owe the debt and will arrange to pay it.
  • Discharge the lien from certain properties or assets.
  • Cause the lien to become subordinate, which means other creditors are first in line ahead of the IRS—this may be required if you want to get a mortgage while there’s a tax lien in play.

Taxes can be complex, and tax liens are especially tricky. If you’re doing anything other than paying the debt in full, you may want to consult a tax professional for assistance as you move forward with the IRS.

Credit Tools

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.