Federal Tax Liens on Real Property: How Long Do They Last?

by Jill Stimson J.D. ; Updated July 27, 2017
Taxpayers have appellate rights to contest their tax delinquencies by requesting hearings with the Office of Appeals.

The Internal Revenue Service can file liens against delinquent taxpayers’ real and personal property by filing a Notice of Federal Tax Lien. Once the IRS files the Notice of Federal Tax Lien, the lien provides notice to the delinquent taxpayers’ creditors and provides the federal government with lien priority status determined by the date of filing. After 10 years or upon debt repayment, the IRS has a legal duty to release their liens.

Lien Releases

When taxpayers pay their IRS tax delinquency, including penalties and interest fees, the IRS issues a Release of the Notice of Federal Tax Lien within 30 days of payment. The IRS also allows taxpayers to purchase bonds to guarantee repayment, and if the IRS accepts the taxpayer’s bond, the IRS will release her lien within 30 days of accepting her bond. Taxpayers are also responsible for paying all release and filing fees imposed by their circuit courts.

Lien Creation

The IRS files a Notice of Federal Tax Lien after it provides taxpayers with opportunities to resolve their tax delinquencies. The IRS sends taxpayers a Notice and Demand for Payment bill. The bill contains the amount of the tax liability and provides taxpayers with 10 days to satisfy their tax delinquencies. When taxpayers do not resolve their tax delinquencies within 10 days, the IRS files a Notice of Federal Tax Lien.

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Collection Options

Taxpayers have 30 days to file written appeals with the IRS Office of Appeals and request hearings. Taxpayers have two ways to contest their delinquencies. The Collection Due Process procedure allows taxpayers to request a hearing after the IRS sends a Notice of Federal Tax Lien, Final Notice, Notice of Levy or Notice of Jeopardy Levy. Taxpayers can use the Collection Appeals Program before or after the government files a Notice of Federal Tax Lien.

Re-Filing Tax Liens

The IRS can re-file its Notice of Federal Tax Lien after 10 years if taxpayers still owe back taxes. Taxpayers have legal rights to sue the IRS for non-release after 10 years if the government did not re-file. Taxpayers may also apply for a Certificate of Discharge with the IRS when they are no longer claiming ownership of their homes. Third-party purchasers of real property can also request Certificates of Discharge.

Certificate of Discharge From Federal Tax Lien

Under the Internal Revenue Code, delinquent taxpayers or purchasers buying property with tax lien encumbrances can request a Certificate of Discharge in certain circumstances. To request a Certificate of Discharge, the purchase price of the taxpayer’s property must be at least twice the amount of the tax lien minus any remaining mortgage obligations or other liens such as mechanics liens. When taxpayers sell their homes, the settlement company will send the IRS their tax payments and any other incidental costs assessed by the government. Taxpayers must use IRS Form 783 to request a Certificate of Discharge and submit their escrow agreements.

Considerations

Since tax laws can frequently change, you should not use this information as a substitute for legal or tax advice. Seek advice through a certified accountant or tax attorney licensed to practice law in your jurisdiction.

About the Author

Jill Stimson has worked in various property management positions in Maryland and Delaware. Stimson worked for the top three property management companies in the commercial industry and focuses her career on property building logistics and tenant relationships. She holds a Juris Doctor and a Bachelor of Science in psychology.

Photo Credits

  • Legal Law Justice image by Stacey Alexander from Fotolia.com
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