Releasing a Federal Tax Lien Under IRC 6325(a)

A federal tax lien is a legal claim by the government against a taxpayer’s property when they have an unpaid tax debt. This claim secures the government’s interest in all property, including real estate and financial assets, and can affect a person’s ability to sell property or obtain credit. The legal framework for removing this claim is found in Internal Revenue Code (IRC) Section 6325. This provision mandates that the Internal Revenue Service (IRS) must release a lien once specific conditions are met, formally extinguishing the government’s claim.

Grounds for Releasing a Federal Tax Lien

The first and most common ground for release is when the tax liability has been fully satisfied or becomes legally unenforceable. Full satisfaction means the entire amount of the tax assessed, including any accrued penalties and interest, has been paid. This can be done through a lump-sum payment or by completing a payment plan.

A tax liability becomes legally unenforceable when the time limit for the IRS to collect the tax expires. This is governed by the Collection Statute Expiration Date (CSED), which is generally 10 years from the date the tax was assessed. Certain taxpayer actions, such as filing for bankruptcy or submitting an Offer in Compromise, can pause or extend this 10-year period.

The second ground for release involves the taxpayer furnishing an acceptable bond. A bond is a financial instrument from a third party, typically a surety company, that guarantees payment of the tax liability. The IRS must approve the bond, ensuring it is sufficient to cover the outstanding tax debt, including all penalties and interest. This option allows a taxpayer to have the lien removed from their property before the tax is fully paid.

Information Required for a Release Request

Although the IRS is supposed to automatically release a lien once a liability is satisfied, a formal request is often necessary to ensure timely action. There is no specific IRS form for this request; instead, the taxpayer must submit a detailed written letter. This letter must contain the taxpayer’s full name, current address, and taxpayer identification number.

The request must clearly identify the lien to be released by including a copy of the Form 668(Y), Notice of Federal Tax Lien. This document contains specific filing information that helps the IRS locate the correct record. The letter should also state which of the legal grounds for release has been met, whether it is full payment, the CSED expiration, or an accepted bond.

Supporting documentation is a part of a complete request package. If the release is based on payment, proof of payment, such as copies of canceled checks or bank statements showing the final payment, should be included. If a bond was furnished, a copy of the accepted bond agreement serves as the necessary proof.

How to Request the Lien Release

The IRS is required to issue a Certificate of Release of Federal Tax Lien within 30 days of determining that the liability has been fully paid or is otherwise legally unenforceable. For routine matters, such as checking the status of a release or requesting a payoff amount, taxpayers can contact the IRS Centralized Lien Operation at 800-913-6050.

If a lien has not been automatically released within 30 days of the liability being satisfied, a formal written request should be sent to the appropriate Collection Advisory Group. Taxpayers can find the correct mailing address for their area by consulting Publication 4235, “Collection Advisory Group Addresses.”

Once the IRS issues the release certificate, it sends the document to the taxpayer’s last known address. The IRS is also responsible for sending the Certificate of Release to the same recording office where the original Notice of Federal Tax Lien was filed, such as a county recorder’s office. This action officially removes the public notice of the lien.