Representation before the IRS · Representing a taxpayer in the collection process

Collection notice and Notice of Federal Tax Lien

The lien and the notice of lien are two different things, and almost every practical error in this area comes from treating them as one. The lien arises by operation of law the moment an assessment goes unpaid after demand. Filing a notice of it changes nothing between the taxpayer and the government — it changes the government’s position against third parties, and it is what gives the taxpayer a hearing right.

The rule

The lien arises without any filing. If a person liable for tax neglects or refuses to pay after demand, the amount — including interest, additions, assessable penalties and costs — is a lien in favour of the United States upon all property and rights to property, real or personal, belonging to that person (IRC § 6321). It attaches to everything the taxpayer owns and everything they later acquire while it runs.

When it starts and stops. Unless another date is fixed by law, the lien arises at the time the assessment is made and continues until the liability is satisfied or becomes unenforceable by reason of lapse of time (IRC § 6322). Nothing needs to be recorded for it to exist.

What filing the notice does. The § 6321 lien is not valid against a purchaser, holder of a security interest, mechanic’s lienor, or judgment lien creditor until a notice meeting § 6323(f) has been filed (IRC § 6323(a)). Filing is therefore about priority against four classes of third party, not about the taxpayer’s liability. Even after filing, the lien remains invalid against certain interests — securities purchased without actual notice, and the other superpriorities in § 6323(b).

Where it is filed. In the one office designated by state law for the county or subdivision where the property is situated; failing a state designation, with the clerk of the United States district court for that judicial district; and in the District of Columbia with the Recorder of Deeds (IRC § 6323(f)(1)).

Refiling. Unless refiled during the required refiling period, a notice loses its original filing date and is treated as filed on the later date. The required refiling period is the one-year period ending 30 days after the expiration of 10 years from the date of assessment, and each 10-year period after that^TY2026 (IRC § 6323(g)(1), (3)).

The hearing right. Filing the notice triggers a collection due process right. The IRS must notify the taxpayer within 5 business days after the notice of lien is filed, with the 30-day hearing window opening the day after that period^TY2026, and the notice must state the amount, the right to request a hearing, the administrative appeals available, the release provisions, and the § 7345 passport certification consequences (IRC § 6320(a)(2), (a)(3)).

Getting out. Four different things, often confused:

• Release — the Secretary shall issue a certificate of release not later than 30 days after the liability is satisfied or becomes legally unenforceable, or a bond is accepted^TY2026 (IRC § 6325(a)).
• Discharge — removes specific property from the lien, leaving the lien otherwise intact (IRC § 6325(b)).
• Subordination — lets another creditor take priority over the lien as to identified property (IRC § 6325(d)).
• Withdrawal — treats the notice as if it had never been filed, available where filing was premature or contrary to procedures, where the taxpayer has entered a § 6159 installment agreement, where withdrawal will facilitate collection, or where the taxpayer or the National Taxpayer Advocate consents and it is in the best interests of both (IRC § 6323(j)(1)). On written request, the IRS must make reasonable efforts to notify credit reporting agencies and named creditors (IRC § 6323(j)(2)).

Current figures

How it works in practice

The distinction that matters to a client is that the lien already exists. A taxpayer who says “they put a lien on me” usually means a notice was filed and their credit or a pending sale is affected. The lien attached at assessment; what changed is the government’s standing against buyers and lenders. That framing decides which remedy to pursue, because discharge, subordination and withdrawal each address a different problem.

Withdrawal is the one worth knowing cold, because it is the only remedy that erases the filing itself, and because § 6323(j)(1)(B) makes an installment agreement an express ground. A client whose complaint is the recorded notice — not the tax — has a statutory route that most do not know exists, and § 6323(j)(2) obliges the IRS to notify credit agencies on written request. Release, by contrast, leaves the filing history in place; the debt is gone, but the record of it is not withdrawn.

Discharge and subordination solve transactions. A client selling a house does not need the lien released; they need the property discharged so the sale can close, or the lien subordinated so a refinancing lender can take first position. Asking for a release in either case gets a refusal that looks like obstruction and is actually a category error.

The refiling rule is a quiet trap on old liabilities. A notice not refiled in its window keeps the lien alive but loses its priority date, so an intervening purchaser or lender may outrank it. On a file older than ten years the refiling history is worth checking before advising a client that the government stands first.

How this has changed

The lien provisions took their modern shape in the Federal Tax Lien Act of 1966 (Pub. L. 89-719), which rewrote §§ 6322 to 6325 and built the priority scheme in § 6323 that still governs. The two later layers matter more in practice. The withdrawal power in § 6323(j), including the installment agreement ground and the obligation to notify credit reporting agencies on request, came from the Taxpayer Bill of Rights 2 and the Restructuring and Reform Act of 1998, which also added the § 6320 CDP right on filing. Most recently, § 6320(a)(3)(E) now requires the notice to explain the § 7345 passport certification consequences of seriously delinquent tax debt.

Exam focus

Separate the lien from the notice, and be able to say what filing achieves. Know the four classes in § 6323(a) that filing defeats. Know all four exit routes and which one each fact pattern needs — especially that a sale needs discharge and a refinancing needs subordination. Know that an installment agreement supports withdrawal. Count the CDP window correctly: five business days from filing, then thirty days beginning the day after. Expect the release deadline in § 6325(a) as a discrete fact.

Check yourself

1. The federal tax lien under IRC 6321 arises: (A) When the notice of lien is filed (B) At the time the assessment is made, on neglect or refusal to pay after demand (C) When the CDP notice is issued (D) When a levy is served Answer: B. IRC § 6321, § 6322.

2. Filing a Notice of Federal Tax Lien primarily affects: (A) The amount the taxpayer owes (B) The lien’s validity against purchasers, holders of security interests, mechanic’s lienors and judgment lien creditors (C) The collection statute (D) The taxpayer’s right to an installment agreement Answer: B. IRC § 6323(a).

3. A client wants to sell one parcel while owing far more than its equity. The correct request is: (A) Release of the lien (B) Discharge of that property from the lien (C) Subordination (D) Withdrawal of the notice Answer: B. IRC § 6325(b).

4. Which is an express statutory ground for withdrawing a notice of lien? (A) The taxpayer disputes the liability (B) The taxpayer has entered into an installment agreement under § 6159 (C) The taxpayer has moved states (D) Ten years have passed since assessment Answer: B. IRC § 6323(j)(1)(B).

5. A notice of lien is filed on 1 June. The 30-day CDP request period: (A) Begins on 1 June (B) Begins the day after the five-business-day period following the filing (C) Begins when the taxpayer receives the letter (D) Begins on the date of assessment Answer: B. IRC § 6320(a)(2), (a)(3)(B).