Finding a Notice of Federal Tax Lien in your mail can feel like a punch to the gut. Your property is on the line, your credit is at risk, and the IRS has staked its claim to everything you own. But here’s what you need to know: a tax lien isn’t the end of the road. With the right legal help, you can get it removed and move forward.
At John D’Amato, PLLC, we’ve helped countless New Yorkers resolve complex tax problems. Head attorney John D’Amato brings years of experience in bankruptcy and IRS solutions to every case. He understands how federal tax liens work and knows exactly how to get them released, withdrawn, or discharged.
What Is an IRS Tax Lien?
A federal tax lien is the government’s legal claim against your property when you fail to pay your tax debt. Under Internal Revenue Code section 6321, the lien attaches to everything you own once three things happen:
- The IRS assesses your tax liability
- The IRS sends you a Notice and Demand for Payment, AND
- You don’t pay the full amount within the specified deadline.
The lien covers real estate, vehicles, bank accounts, investments, and business assets. It even attaches to property you acquire after the lien is filed.
The IRS takes collection seriously. According to the IRS Data Book, the agency collected $77.6 billion in unpaid taxes during fiscal year 2024, a 13.6% increase from the previous year.
What Happens When You Get a Tax Lien? How a Federal Tax Lien Affects You
A tax lien is essentially a public claim that says the IRS has a stake in your property as a result of your tax debt. Unlike a levy, a lien doesn’t mean the government is seizing your property. However, it does create real problems in your daily life:
- Credit and financing issues: While tax liens no longer appear on consumer credit reports as of 2017, they’re still public record. Lenders who search public records will find the lien, making it nearly impossible to get a mortgage, refinance your home, or secure business financing.
- Hindering property sales: You can’t sell property with a clear title when a tax lien is attached. The IRS has first claim to the proceeds, and most buyers won’t close until the lien is resolved.
- Damages business operations: If you own a business, a tax lien can damage your reputation with vendors and clients. It signals financial trouble and can cost you contracts.
- Passport revocation: The IRS can certify seriously delinquent tax debt to the State Department. As of 2024 guidelines, if you owe more than $62,000 (including penalties and interest), your passport may be revoked or your renewal denied.
The IRS typically files liens when you owe more than $10,000. The agency works with taxpayers to get their liens released or removed, but you need to act fast.
The Difference Between a Lien and a Levy
People often confuse these two terms, but they’re very different.
A lien is a legal claim against your property. It secures the government’s interest but doesn’t take anything from you immediately. Think of it like a mortgage: the lender has a claim, but you still control the property.
A levy is an actual seizure. The IRS takes your property to satisfy the debt. They can levy your wages, bank accounts, Social Security benefits, retirement accounts, cars, and real estate.
Liens come first. If you ignore a lien, the IRS can escalate to a levy. The good news? You can stop this process before it gets that far.
The Cost of Waiting: What Happens If You Ignore a Tax Lien?
Every day you wait to address a tax lien costs you money. Interest accrues daily at the federal short-term rate plus 3%. Failure-to-pay penalties add 0.5% per month, up to 25% of your unpaid taxes.
But the real cost is opportunity. While you have a tax lien:
- You can’t refinance to lower rates
- You can’t sell property without IRS approval
- You can’t get business financing, AND
- You risk wage garnishment and bank levies.
According to the IRS, the agency collected $1.3 billion from high-income, high-wealth individuals who had unpaid tax debts in 2024. The IRS isn’t slowing down. They’re getting more aggressive.
Your Rights When Facing a Tax Lien
The IRS must follow specific rules when filing a lien. You have important rights:
Collection Due Process (CDP) Hearing
When the IRS files a lien, they must send you notice of your right to a CDP hearing. You have 30 days from the date on the notice to request this hearing. At the hearing, you can:
- Challenge the amount you owe
- Discuss collection alternatives
- Propose an installment agreement or offer in compromise
- Request withdrawal of the lien.
Appeal Rights
If the CDP hearing doesn’t resolve your issue, you can appeal to the US Tax Court. You have 30 days after the IRS issues its determination to file your appeal.
Collection Alternatives
The IRS offers several alternatives to forced collection:
- Installment agreements (payment plans)
- Offers in compromise (settling for less)
- Currently Not Collectible status (temporary collection pause)
- Penalty abatement (reducing what you owe).
John D’Amato has successfully navigated CDP hearings and appeals for clients throughout New York. His clients appreciate his straightforward approach and his ability to negotiate favorable outcomes with the IRS.
Five Ways to Remove an IRS Tax Lien
Getting a lien removed requires meeting specific requirements under Internal Revenue Code Section 6325. Here are the main options:
Pay Your Tax Debt in Full
The simplest way to remove a lien is to fully pay what you owe. The IRS must release the lien within 30 days after you satisfy the debt. This includes all taxes, penalties, and interest.
If you can’t pay the full amount now, consider:
- Taking a personal loan
- Borrowing from retirement accounts (with caution)
- Selling assets
- Asking family members for help.
If making a full payment could put you in a financial tight spot, it’s best to consult a professional such as an IRS liens attorney first. You may have other legal options that are more financially viable in your situation.
Request a Lien Withdrawal
A withdrawal removes the public Notice of Federal Tax Lien from the record. It’s better than a simple release because it doesn’t show up on credit reports.
You can request a withdrawal if:
- You qualify for the Fresh Start Program: If you owe $25,000 or less and set up a direct debit installment agreement, the IRS will typically withdraw the lien after three payments. You must be current on all tax filings.
- The lien was filed in error: If the IRS made a mistake under IRC Section 6326, they must withdraw the lien.
- It benefits both parties: The IRS may withdraw a lien if doing so helps them collect the debt. An example is if withdrawal allows you to refinance and pay off your tax debt.
To request withdrawal, file Form 12277, titled Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien. Include evidence that you meet the criteria.
Important note: A lien withdrawal removes the public Notice of Federal Tax Lien (NFTL) from property records. This is distinct from a release, which removes the legal claim but not the public record. Lien withdrawal prevents the NFTL from impacting background checks and lender due diligence, which is why it’s sometimes considered “better” from a reputational standpoint.
John D’Amato knows the distinctions and is experienced in exactly what documentation the IRS needs to approve withdrawal requests. Get help from John D’Amato, PLLC, today.
Apply for Lien Discharge
A discharge removes the lien from specific property while keeping it on your other assets. This helps when you need to sell one piece of property to pay your tax debt.
The IRS grants discharge under IRC Section 6325(b) when:
- You pay the IRS an amount equal to the property’s value
- The IRS determines that their interest in the property has no value
- Another property has enough equity to secure the debt, OR
- The government’s interest is sufficiently protected.
Discharge is common in real estate transactions. If you’re selling your home and using the proceeds to pay your tax debt, the IRS will often discharge the lien on that property at closing.
Request Lien Subordination
Subordination doesn’t remove the lien. Instead, it allows other creditors to move ahead of the IRS. This can help you:
- Refinance your mortgage
- Get a business loan
- Obtain a line of credit.
The IRS grants subordination when it increases the amount they can collect. For example, if subordination lets you refinance at a lower rate and use the savings to pay your tax debt faster, the IRS may agree.
Apply for subordination using Form 14134 (Application for Certificate of Subordination of Federal Tax Lien). You’ll need to show how subordination benefits the government.
Wait for the Collection Statute to Expire
The IRS has 10 years from the assessment date to collect your tax debt under IRC Section 6502. After 10 years, the debt becomes unenforceable, and the lien must be released.
However, certain events pause or extend this 10-year period:
- Filing bankruptcy
- Submitting an offer in compromise
- Requesting a CDP hearing
- Filing a lawsuit against the IRS
- Living outside the United States.
If you’re considering waiting out the clock, consult with an attorney first. The IRS may bring an action in federal court to extend the collection period beyond 10 years.
Collection Alternatives That Work
Before the IRS files a lien, or while you’re working to remove one, consider these alternatives:
- Installment agreements: These payment plans let you pay portions over time. If you owe less than $50,000, you can qualify for a streamlined agreement without extensive financial disclosure. The IRS collected more than $16 billion through installment agreements in fiscal year 2024.
- Offers in compromise: If you can’t pay your full debt, you may be able to settle for less. The key is proving that you can’t pay the full amount or that paying it would create financial hardship. In fiscal year 2024, the IRS accepted 7,199 offers totaling $163.4 million, according to IRS collection statistics.
- Currently Not Collectible status: If you’re facing genuine financial hardship, the IRS may temporarily pause collection. You still owe the debt, but the IRS won’t take enforcement action while you’re in this status.
- Penalty abatement: Penalties can double your tax bill. If you have reasonable cause for not paying on time (such as a serious illness, natural disaster, or death in the family), the IRS may reduce or eliminate penalties.
Attorney John D’Amato evaluates which option fits your situation best. He’s helped clients reduce their tax debt by thousands through penalty abatement and offers in compromise.
Common Mistakes to Avoid
- Ignoring IRS notices: The biggest mistake is pretending the problem doesn’t exist. The IRS won’t forget about your debt. Ignoring notices leads to liens, levies, and wage garnishment.
- Missing deadlines: You have 30 days to request a CDP hearing after the IRS files a lien. Missing this deadline limits your options.
- Failing to file returns: If you haven’t filed tax returns, the IRS can file a substitute return and assess taxes. This almost always results in a higher tax bill than you’d owe if you filed yourself.
- Providing incomplete information: When you apply for lien withdrawal or discharge, you must provide complete financial information. Incomplete applications get denied.
- Attempting DIY offers in compromise: In 2024, the IRS accepted fewer than 25% of offers in compromise. Without professional help, your chances drop even lower.
Removing an IRS Tax Lien: How a New York Tax Attorney Can Help
Dealing with the IRS by yourself is risky. The agency has unlimited resources and experienced staff. One mistake can cost you thousands or lead to property seizure.
Here’s what Attorney John D’Amato provides:
- Immediate protection: When you hire an attorney, the IRS must communicate through your lawyer. This stops aggressive collection calls and gives you breathing room.
- Strategic planning: John reviews your entire financial situation and tax history. He identifies the best solution for your specific circumstances, whether that’s an installment agreement, offer in compromise, or lien withdrawal.
- Negotiation experience: The IRS doesn’t have to accept your first proposal. John knows how to present your case to maximize your chances of approval. His background in bankruptcy law gives him unique insights into protecting your assets.
- Hearing representation: At CDP hearings and appeals, having an attorney matters. John has decades of IRS hearing experience. He presents evidence in a compelling manner, challenges IRS assertions, and fights for the best outcome.
- Documentation expertise: The IRS requires extensive paperwork. Missing documents or incomplete forms lead to delays and denials. John ensures everything is done right the first time.
- Long-term compliance: After resolving your lien, John helps you stay compliant with future tax obligations. This prevents new problems from developing.
John D’Amato, PLLC: Real Results for Real People
John D’Amato’s clients consistently praise his work. Brian S. said, “John and his team were amazing. They are very thorough and efficient when they handled my case. John himself is an extremely nice guy and easy to talk to. When I had a question, they responded quickly.”
Victoria A. shared: “John and his support staff were excellent! John always took the time to answer my questions right away, either by phone or email. I am grateful for the firm and what they did to protect my credit and assets.”
These aren’t just nice words. They reflect John’s commitment to his clients and his skill at resolving complex tax problems.
Take Steps Today To Remove Your IRS Tax Lien
If you’re facing an IRS tax lien in New York, don’t wait. The sooner you act, the more options you have.
Attorney John D’Amato has helped many New Yorkers resolve tax liens and other IRS problems. As a top-rated attorney in bankruptcy and IRS solutions, John brings both legal knowledge and practical experience to every case. He understands what you’re going through and knows how to protect your rights.
Call (716) 703-9099 today for a free consultation. John will review your situation, explain your options, and give you a clear path forward. Don’t let an IRS tax lien control your life. Take the first step toward resolution right now.
Frequently Asked Questions
How long does it take to remove a tax lien?
It depends on the method. If you pay in full, the IRS must release the lien within 30 days. Withdrawal requests can take 30 to 60 days after approval. Discharge and subordination typically process within 45 days if you provide all required documentation.
Will removing a lien repair my credit?
A lien release shows the debt is satisfied, but the lien record remains public for seven years. A lien withdrawal is better because it removes the public record entirely. However, since 2017, consumer credit bureaus no longer include tax liens on credit reports.
Can I get a mortgage with a tax lien?
It’s very difficult. Most lenders won’t approve a mortgage while a federal tax lien is active. You typically need to resolve the lien through release, withdrawal, or subordination before getting financing.
What if I disagree with the amount the IRS says I owe?
Request a Collection Due Process hearing immediately. You can challenge the tax liability at this hearing if you haven’t had a previous opportunity to dispute it. An attorney can help you gather evidence and present your case.
Does bankruptcy eliminate tax liens?
Bankruptcy can discharge some tax debts, but a lien filed before bankruptcy will usually survive. However, John D’Amato’s dual experience in bankruptcy and tax law allows him to structure solutions that address both areas effectively.
How much does it cost to hire a tax attorney?
Legal fees vary based on case complexity. John D’Amato offers free consultations and explains all costs upfront. Many clients find that attorney fees are a small price compared to the money saved through successful negotiation with the IRS.
Contact John D’Amato Today
John D’Amato, PLLC, serves clients throughout New York with comprehensive bankruptcy and IRS solutions. Head attorney John D’Amato combines legal knowledge with practical experience to achieve results for his clients.
Whether you’re facing a federal tax lien, wage garnishment, or other IRS enforcement action, John has the skills and experience to help. His client testimonials speak to his dedication, responsiveness, and effectiveness.
Don’t face the IRS alone. Call (716) 703-9099 today to schedule your free consultation and start protecting your property and your future.