How to Use IRS Notice 1450 to Remove a Federal Tax Lien

Dealing with a federal tax lien can be stressful, especially when it affects your ability to sell property or secure financing. The IRS provides Notice 1450 as a guide for taxpayers looking to remove these liens once they’ve met the necessary conditions. Using this notice correctly can help speed up the process and ensure you have the right documentation.

Successfully removing a lien requires following specific IRS steps. Knowing what actions to take and when to follow up can prevent unnecessary delays.

Release Requirements for a Federal Tax Lien

The IRS releases a federal tax lien when the tax debt is fully paid or no longer legally enforceable. This typically happens when the balance is settled, but it can also occur if the statute of limitations on collection expires. Under Internal Revenue Code 6502, the IRS has ten years from the date of assessment to collect a tax debt. If this period expires without full payment, the lien becomes unenforceable and must be released.

A lien may also be released if the IRS accepts a bond under Internal Revenue Code 6325(a)(2). This allows taxpayers to secure a bond equal to the debt amount, ensuring the government’s interest is protected while removing the lien from public records. This option is often used when clearing a lien is necessary for refinancing a mortgage or completing a financial transaction.

In some cases, the IRS may release a lien if doing so aids tax collection. Under Internal Revenue Code 6325(b), the agency can discharge specific property from the lien if it allows the taxpayer to generate funds to pay the debt. This is common when a taxpayer sells an asset and the proceeds go directly toward the outstanding balance.

Payment Details for Removing the Lien

The most direct way to remove a lien is by paying the outstanding balance. The IRS accepts payments via the Electronic Federal Tax Payment System (EFTPS), direct debit, credit or debit card, wire transfer, cashier’s check, or money order. Some payment methods clear faster than others. A same-day wire transfer may reflect in IRS records within 24 hours, while a mailed check could take weeks to process.

If full payment isn’t possible, an installment agreement allows structured payments over time. While an active installment plan does not automatically remove a lien, paying the balance under a streamlined agreement—where the total liability is under $50,000 and will be paid within 72 months—may qualify for lien withdrawal under the IRS’s Fresh Start program. Unlike a lien release, a withdrawal removes the lien from public records entirely, which can help with credit scores.

For taxpayers facing financial hardship, an Offer in Compromise (OIC) may be an option. This allows the IRS to settle the debt for less than the full amount owed if full payment would create financial hardship. If an OIC is accepted and the agreed-upon amount is paid, the lien will be released. However, approval rates for OICs are low, and applicants must provide extensive financial documentation to prove their inability to pay the full liability.

Documentation and Progress Tracking

Keeping accurate records throughout the lien removal process helps prevent delays. The IRS requires confirmation that the tax obligation has been resolved before issuing a Certificate of Release of Federal Tax Lien (Form 668(Z)). Taxpayers should retain copies of all payment receipts, bank confirmations, and IRS correspondence. If payments were made electronically, downloading transaction records from the bank or EFTPS portal provides immediate proof if discrepancies arise.

After making the final payment or fulfilling other lien release conditions, requesting an account transcript from the IRS can verify whether the balance reflects as fully satisfied. This transcript, available through the IRS’s online services or by mail, provides a history of assessments, payments, and adjustments. If the lien still appears active despite meeting all obligations, taxpayers may need to submit Form 13794, Request for Release of Federal Tax Lien, along with supporting documentation to prompt IRS review.

Tracking the status of the lien release is important. The IRS must issue the release within 30 days after the debt is settled, but processing times can vary. Taxpayers should monitor their credit reports and county recorder’s office filings to confirm the lien has been removed. If the lien remains on public records beyond the expected timeframe, contacting the IRS Centralized Lien Operations unit with supporting documents can help resolve the issue.

Additional Steps for Clouded Titles

A federal tax lien can complicate real estate transactions by clouding a property’s title. Even after the IRS releases the lien, it may still appear in public records, causing issues during title searches. Title companies often require proof that the lien has been removed before issuing title insurance, which is necessary for most real estate sales and refinancings. If a lien release has been processed but is not reflected in county records, obtaining a certified copy of the Certificate of Release of Federal Tax Lien (Form 668(Z)) from the IRS and submitting it to the local recording office can help clear the title.

If a property is being sold and the lien was previously attached, buyers or lenders may request a title affidavit affirming that the debt has been satisfied. This document, typically prepared by a real estate attorney or escrow officer, serves as a sworn statement confirming that no federal claims remain against the property. Working with a title company experienced in IRS lien releases can help streamline the process, as they can coordinate with the IRS and county offices to confirm the lien’s removal.

When to Contact the IRS for Updates

Even after meeting all requirements for lien removal, delays can occur due to processing backlogs or administrative errors. The IRS must issue a Certificate of Release of Federal Tax Lien within 30 days of the debt being satisfied. If this does not happen, taxpayers should contact the Centralized Lien Operations unit to confirm whether the release has been processed. Having documentation, such as payment confirmations or an account transcript, readily available can help expedite the inquiry.

If a lien remains on public records beyond the expected timeframe, contacting the local recording office where the lien was originally filed may provide insight into whether the IRS has submitted the necessary release documents. In some cases, the IRS may have issued the release, but the county clerk’s office has not updated its records. If the IRS has not processed the release, submitting Form 13794 with supporting documents can prompt a review. Taxpayers who need expedited resolution due to pending financial transactions may also request assistance through the Taxpayer Advocate Service, which can intervene if delays are causing hardship.

Possible Hurdles in Finalizing Lien Release

Even after the IRS has issued a lien release, several obstacles can prevent the lien from being fully removed from public records or credit reports. These issues can create complications when applying for loans, selling property, or securing business financing.

Processing errors are common. If the IRS fails to properly record the release or if the county clerk’s office does not update its records, the lien may still appear in public filings. In such cases, obtaining a certified copy of the release from the IRS and submitting it directly to the recording office can resolve the issue.

Credit reporting agencies may not automatically update their records after a lien is released. Taxpayers should request a copy of their credit report and, if the lien still appears, file a dispute with the credit bureau along with proof of release.

Taxpayers who previously negotiated an Offer in Compromise or a lien withdrawal under the Fresh Start program must comply with IRS terms. Any missed payments or reporting failures could result in the lien being reinstated. If a lien reappears despite meeting all conditions, taxpayers should contact the IRS Collections unit to determine whether an administrative error occurred or if additional action is required.