Federal Tax Lien Release, Withdrawal, or Subordination

Once the IRS determines that a taxpayer owes tax, sends a demand for payment, and ten days pass with payment being made, a lien on all of his or her property, income, and assets is automatically created. But at this point, no one knows about this lien except the IRS and the taxpayer (assuming the taxpayer opens mail from the IRS). It is called a “silent lien.”

The IRS then has discretion to make this silent lien very noisy and very public by filing a Notice of Federal Tax Lien (NFTL) with the public recording authority (such as the County Clerk or, in New York City, the City Register), the lien is findable and visible to anyone who cares to look, like a bank considering your loan application, or an employer doing a background check.

While NFTLs are no longer reported on credit reports issued by the three major credit reporters, Experian, Equifax, and TransUnion, these federal tax liens, as mentioned above, are still findable, and still can harm you.

Just try getting a loan once the IRS files its Notice of Federal Tax Lien with the County Clerk! Getting a mortgage or home equity loan or automobile loan becomes difficult or impossible. This can cause enormous problems if the taxpayer is trying to buy or sell an apartment or a house. Action must be taken.

There are some circumstances where the IRS may be persuaded to release or withdraw a Notice of Federal Tax Lien which has been filed.

Also, there are circumstances where the IRS may agree to subordinate their lien so that you can go forward, for example, with selling your house or apartment.