Tax Defense ✦ Federal Tax Liens
A Tax Lien Doesn’t Have to Freeze Your Life.
A federal tax lien attaches to everything you own and everything you acquire, and it surfaces at the worst times: closings, refinances, business loans. North Star Law Firm helps New Mexico taxpayers withdraw, release, discharge, and subordinate IRS liens, and resolve the debts underneath them.
What You’re Dealing With
What does a federal tax lien actually do?
The lien arises automatically under I.R.C. § 6321 once tax is assessed, demanded, and unpaid; the Notice of Federal Tax Lien the IRS records in the county records simply makes it public and establishes priority against other creditors under § 6323. It attaches to real estate, vehicles, business assets, accounts receivable, and property you acquire later. A lien is not a levy: nothing is seized. But it clouds title, complicates escrow, spooks lenders, and sits in the public record where anyone can find it.
New Mexico wrinkle worth knowing: community property rules can expose community assets to a lien arising from one spouse’s tax debt, which makes lien analysis in married households a two-person question even when only one name is on the notice.
Four Different Fixes
Withdrawal, release, discharge, subordination: which one do you need?
| Remedy | What it does | Classic use |
|---|---|---|
| Withdrawal (§ 6323(j)) | Pulls the public notice as if never filed | Direct-debit installment agreements on qualifying balances; IRS procedural errors |
| Release (§ 6325(a)) | Extinguishes the lien itself | Debt paid, settled, or expired under the collection statute |
| Discharge (§ 6325(b)) | Removes a specific property from the lien | Selling a home while the lien stays on other assets; IRS gets its share of proceeds |
| Subordination (§ 6325(d)) | Lets a new lender jump ahead of the IRS | Refinancing at a better rate so more cash flows to the tax debt |
Can you sell or refinance a home with a tax lien on it?
Usually, yes, with the right application filed early. A certificate of discharge lets a sale close with the IRS paid from proceeds at closing; a subordination lets a refinance close by putting the new mortgage ahead of the lien where the deal benefits collection. Both are application-driven, both take weeks the escrow calendar rarely allows, and both die when started too late. If a transaction is anywhere on your horizon, the lien work starts now, not when the title company calls.
What actually gets rid of the lien for good?
Resolving the debt underneath it: full payment, an accepted offer in compromise, or expiration of the ten-year collection statute, each of which compels release. For qualifying balances, converting to a direct-debit installment agreement supports withdrawal of the public notice even while the debt is being paid, which is the fastest route to cleaning up the public record. Lien strategy and debt strategy are the same conversation, and we run them together.
The Attorney-CPA Difference
Lien work is paperwork with deadlines hiding inside deals. Start early.
- Discharge and subordination applications built to close real transactions on time
- Withdrawal strategy that clears the public record while a payment plan runs
- Community-property lien analysis for New Mexico married households
- The underlying debt resolved, because that’s what actually ends the lien
Proof, In Print
He wrote the book on tax defense. Literally.
Phillip Zagotti co-authored Taxed: A Taxpayer’s Guide to Tax Defense and Resolution with Ashley Burdette, a plain-English guide to audits, IRS collections, and the resolution tools described on this page. If you want to understand your situation before you call anyone, or you’d rather work the problem yourself first, start with the book. When you decide you want a professional in your corner, the consultation is free.
Questions & Answers
Federal tax lien questions, answered
Does a tax lien show up on my credit report?
The major bureaus stopped reporting tax liens in 2018, so it no longer appears as a credit-report tradeline. But it remains a public record that lenders, title companies, and background checks find routinely, and mortgage underwriting still asks about it directly.
Can the IRS take my house because of a lien?
A lien is a claim, not a seizure. Actually taking a primary residence requires separate levy procedures including court approval, which is rare. The practical harm of a lien is at transaction time: selling, refinancing, borrowing.
The debt was paid. Why is the lien still showing?
Release should follow within 30 days of satisfaction, but recording lags and errors are common. A certificate of release can be demanded and expedited, and erroneous liens can be withdrawn with a request that also notifies credit agencies at your election.
Will an installment agreement remove my lien?
A regular agreement leaves the lien in place. A direct-debit agreement on qualifying individual balances supports withdrawal of the notice after a short compliance period, which is why the structure of the agreement matters as much as its existence.
How does the lien interact with bankruptcy?
Carefully. A bankruptcy discharge can eliminate personal liability for a tax while a properly filed lien survives against property you owned at filing. Whether that matters depends on your equity and your plans, which is exactly the analysis an attorney-CPA runs before choosing bankruptcy over other tools.
A lien problem is a deadline problem wearing a disguise.
Free consultation: what the lien reaches, which remedy fits, and how to keep your closing, refinance, or business loan alive.