What Can I Do About an Erroneous IRS Tax Lien?
If an erroneous IRS federal tax lien has been placed on your property, you have several options.
Internal Revenue Code Section 6325(a)(1) requires the IRS to release a Notice of Federal Tax Lien imposed for a tax debt that is either already satisfied or legally unenforceable. The IRS is required to issue a Certificate of Release on its own and without a request from the taxpayer within a month of determining that the release of the lien is warranted. If the IRS knowingly or negligently fails to release a lien, Internal Revenue Code Section 7432 permits taxpayers to sue for damages.
An erroneous tax lien also may be discharged, pursuant to Internal Revenue Code Section 6325(b). In a discharge, specified property is removed from the tax lien, but the lien may remain in effect against other pieces of property not discharged. Property will be discharged from a federal tax lien upon a taxpayer's request if: (1) the total value of the taxpayer's other property, minus encumbrances with priority over the tax lien, is at least double the tax liability at issue; (2) the IRS is paid the value of its interest in the property to be discharged (if there is any such value); or (3) if the property is to be sold with the IRS's lien attaching to the proceeds in the same manner and with the same priority as the lien itself.
It also may be possible to obtain a Certificate of Nonattachment from the IRS, which states that specified properties are not included in the tax lien. This can be helpful if you are seeking to refinance a house which is not included in the lien, but are having difficulty doing so because of the federal tax lien on other pieces of property.
Another option, provided by Internal Revenue Code Section 6323(j), is for an erroneous tax lien to be withdrawn by the IRS if; 1) the filing of the lien was premature or otherwise not in accordance with administrative procedures; 2) the taxpayer previously agreed to repay the debt in installment payments; 3) withdrawing the notice would facilitate repayment of the debt; or 4) withdrawal of the lien would be in the best interests of both the taxpayer and the government. A withdrawal of a tax lien eliminates all public notice of the lien.
Additional Tax Litigation FAQs
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What Rights do Taxpayers Have When Dealing With the IRS?
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What is the IRS Appeals Office?
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What Protections are Taxpayers Entitled to When They Have a Dispute with the IRS?
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How Does the IRS Determine Which Tax Returns to Audit?
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What is an Installment Agreement?
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What is an Offer in Compromise?
A: An "Offer in Compromise" (OIC) is an arrangment made with the IRS to settle unpaid tax accounts for less than the full amount of the balance due. This … More -
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Which Taxpayers Qualify to Make an Offer in Compromise to the IRS?
A: The Offer in Compromise program is an option for taxpayers who can't pay the tax they owe, either in a lump sum or through an installment agreement, and have … More -
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What is a Partial Payment Agreement with the IRS?
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What is Innocent Spouse Relief?
A: As set forth in more detail in IRS Publication 971, under the law, spouses are jointly and individually responsible for any tax, interest, and penalties on a … More -
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How do I Apply for Innocent Spouse Relief?
A: To apply for Innocent Spouse relief, file Form 8857, "Request for Innocent Spouse Relief," and attach a statement explaining why you qualify for … More
Tax Law Sub-categories
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Estate and Inheritance Tax
Federal Income Taxation Internal Revenue Service Property Tax |
Sales Tax
State Income Taxes Tax Identification Number Tax Liens |
