How Long Does a Federal Tax Lien Last?

A federal tax lien is the government’s legal claim against a person’s property, including real estate, personal property, and financial assets, when they fail to pay a tax debt. The lien arises automatically after the Internal Revenue Service (IRS) assesses the liability, sends a bill for payment, and the taxpayer does not pay the full amount. This legal claim serves as a public notice to creditors that the government has a right to an individual’s assets, but its duration is limited by federal law.

The Ten-Year Collection Statute

The lifespan of a federal tax lien is governed by a timeline established in the Internal Revenue Code Section 6502. The IRS has ten years to collect a tax debt after it has been assessed, a period known as the Collection Statute Expiration Date (CSED). Once this statutory period concludes, the lien is extinguished.

The ten-year clock begins on the date the tax was formally assessed by the IRS, not when a public Notice of Federal Tax Lien (NFTL) is filed. The NFTL can be filed at any point after the assessment, but the CSED is tied directly to the initial assessment date.

Circumstances That Suspend the Ten-Year Period

Certain actions can pause, or “toll,” the ten-year countdown on the CSED, extending the time the IRS has to collect the debt. When a tolling event occurs, the CSED clock stops and resumes only after the event has concluded, adding the paused time to the end of the original ten-year period.

Common tolling events include:

• Filing for bankruptcy. The CSED is suspended for the entire duration of the bankruptcy proceeding, plus an additional six months after the case ends. For example, a one-year bankruptcy proceeding would add eighteen months to the collection statute.
• Submitting an Offer in Compromise (OIC), which pauses the clock until the IRS makes a final decision, plus 30 days if rejected and for the duration of any appeal.
• Requesting a formal installment agreement or a Collection Due Process (CDP) hearing, which suspends the CSED while the request is pending.
• Applying for Innocent Spouse Relief to be absolved of a spouse’s tax liability.
• Being continuously outside of the United States for at least six months.

IRS Actions to Maintain a Lien

The tax lien and the Notice of Federal Tax Lien (NFTL) are two separate concepts. The lien arises automatically at assessment, while the NFTL is a public document filed to alert other creditors of the government’s claim. To maintain its priority against other creditors, the IRS must refile the NFTL within a specific “required refiling period,” which is the one-year period ending 30 days after the 10-year anniversary of the tax assessment.

Refiling the NFTL does not extend the CSED; it only preserves the government’s legal standing. If the IRS fails to refile, the NFTL loses its priority, and the underlying lien still exists, but the government’s claim may fall behind other creditors. Lien reinstatement can occur if a taxpayer defaults on an agreement, such as an OIC or Installment Agreement, that led to a lien release. The IRS can revoke the release and reinstate the lien, restoring its collection authority.

Effects of Lien Expiration

When the CSED is reached, the federal tax lien becomes legally “self-releasing” and unenforceable by law. The IRS loses its authority to collect the underlying tax debt, and this expiration happens automatically. Although the lien is legally extinguished, the public Notice of Federal Tax Lien may not disappear from county records or credit reports. This lingering public notice can create significant problems for a taxpayer, especially when trying to sell property or obtain a loan.

The IRS is required to issue a Certificate of Release of Federal Tax Lien within 30 days of the lien becoming unenforceable, but a taxpayer may need to proactively request it. This document, Form 668(Z), is the official proof needed to clear public records with lenders and credit agencies.

Alternative Methods for Lien Removal

Taxpayers have several options to remove a federal tax lien before the ten-year statute of limitations expires.

Full Release

A full release is granted when the tax debt is paid in full or if the taxpayer posts a bond guaranteeing payment. Once the liability is satisfied, the IRS will issue a Certificate of Release, and the lien is permanently removed from all assets.

Discharge of Property

A discharge removes the lien from a specific piece of property, which is often used to facilitate its sale or refinancing. The taxpayer must apply for the discharge, and the IRS may grant it if the government’s interest in the property has no value or if the sale proceeds are paid to the IRS. The lien remains in effect on all of the taxpayer’s other property.

Subordination

Subordination is an action where the IRS allows another creditor’s claim to take priority over the federal tax lien. This does not remove the lien but moves the government’s claim to a lower position, which is often necessary to obtain a loan or refinance a mortgage. The IRS may agree to subordinate its lien if doing so will increase the chances of the tax debt being paid.

Withdrawal

A withdrawal removes the public Notice of Federal Tax Lien from public records, which can help repair credit. This action does not extinguish the underlying tax debt or the automatic lien that arose at assessment. The IRS may grant a withdrawal if the NFTL was filed prematurely, if the taxpayer enters into a Direct Debit Installment Agreement, or if withdrawal is in the best interest of both parties. To qualify for a withdrawal through a payment plan, the taxpayer must owe $25,000 or less and agree to pay the debt in full within 60 months or before the CSED expires. The IRS also requires at least three consecutive direct debit payments and for the taxpayer to be current on all other tax obligations.