How Long Does a Federal Tax Lien Last?

A federal tax lien is a legal claim the government places on a person’s property due to unpaid tax debt. This claim secures the government’s interest in all of a taxpayer’s assets, including real estate, personal property, and financial accounts. The lien applies to both currently owned assets and any acquired while the lien is active. A lien differs from a levy, as a lien is a claim securing a debt, while a levy is the actual seizure of property to satisfy it. Filing a Notice of Federal Tax Lien makes the government’s claim public to other creditors.

The Standard Duration of a Federal Tax Lien

The lifespan of a federal tax lien is governed by a timeline known as the Collection Statute Expiration Date (CSED). The Internal Revenue Service (IRS) generally has ten years to collect a tax debt, and this period begins on the date of assessment. The assessment date is the day the IRS officially records the tax liability in its records. This can occur shortly after a taxpayer files a return or after an audit concludes that a tax debt is owed.

It is a common misconception that the ten-year clock starts from the tax return’s due date. The clock’s trigger is exclusively the date of assessment, which is a specific, documented event shown on the Notice of Federal Tax Lien. Once the ten-year CSED is reached, the lien is legally considered “self-released,” meaning it becomes unenforceable by law. The government’s legal claim on the property is extinguished even if the IRS has not formally filed a Certificate of Release.

Circumstances That Extend the Lien’s Duration

Certain actions taken by a taxpayer can pause, or “toll,” the ten-year CSED clock, thereby extending the life of the federal tax lien. These events legally prevent the IRS from taking collection action, and as a result, the law suspends the running of the collection statute for the duration of the event and sometimes for a period afterward.

Common events that toll the CSED include:

• Filing for bankruptcy. When a taxpayer files for bankruptcy, an “automatic stay” goes into effect that prohibits most creditors, including the IRS, from collection activities. The CSED clock is suspended for the entire period the bankruptcy case is pending, plus an additional six months after the case is concluded.
• Submitting an Offer in Compromise (OIC). An OIC is a formal request for the IRS to accept a lower amount to settle a tax debt. The CSED is tolled while the OIC is being evaluated by the IRS, for 30 days immediately following a rejection, and during the period an appeal of the rejection is being considered.
• Requesting a Collection Due Process (CDP) hearing. A taxpayer has a right to this hearing after certain collection notices are issued. Requesting one will pause the CSED clock for the duration of the hearing and any subsequent appeals.
• Requesting Innocent Spouse Relief. This provision can relieve one spouse of tax liability from a joint return, and the request suspends the collection statute while it is being considered.
• Living outside the U.S. If a taxpayer is living outside of the United States for a continuous period of at least six months, the collection statute is suspended during their absence.

Options for Early Lien Removal

Taxpayers have several proactive options to remove a federal tax lien before the ten-year collection statute expires. These methods address the lien in different ways, either by satisfying the debt to achieve a full release or by altering the lien’s status to facilitate other financial transactions.

The primary options include:

• Lien Release. The most direct method is a lien release, which occurs when the underlying tax liability is fully satisfied. This can be achieved by paying the debt in full, through an IRS-approved Offer in Compromise where the agreed-upon amount is paid, or if a taxpayer furnishes a bond that guarantees payment. Once the liability is satisfied, the IRS is required to issue a Certificate of Release of Federal Tax Lien within 30 days.
• Lien Withdrawal. This action removes the public Notice of Federal Tax Lien, which can be beneficial for credit repair, but it does not extinguish the underlying statutory lien. The taxpayer still owes the debt, and the government’s claim remains intact. A taxpayer may qualify for a withdrawal if they enter into a Direct Debit Installment Agreement, if the notice was filed in error, or if withdrawal is shown to facilitate quicker collection of the tax.
• Lien Discharge. For situations involving specific assets, a discharge removes the lien from a particular piece of property, such as a house, to allow for its sale or transfer. The IRS may grant a discharge if the taxpayer pays an amount equal to the government’s interest in that specific property.
• Lien Subordination. This option does not remove the lien but allows another creditor’s claim to take priority over the federal tax lien. Subordination is often used to enable the refinancing of a mortgage, where the new lender requires first priority.