If you’ve been dealing with federal tax debt, you know that the process can be complicated. Once you’ve paid off all of your debt or negotiated different terms which remove liens on your property, you can request a Certificate of Release for the lien.
The IRS Notice 1450 is the instructions for Requesting a Certificate of Release of Federal Tax Lien. The IRS has imposed a lien against some of your property if you have received this notice. You should read the information carefully and follow the required steps to obtain your Certificate of Release.
What Should I Do?
If you’ve received a referral to Tax Topic 152, don’t panic! Read carefully through the topic, and figure out which situation applies to you. Make a list of questions for the IRS if you need more clarification.
Remember that if your account lists Tax Topic 152, the IRS doesn’t need anything from you at this point. They are still processing your return.
When Does a Federal Tax Lien Start?
The IRS will place a tax lien on your account when you do not respond to the first notice of the balance due or fail to pay the entire balance listed on the notice.
The IRS sends out automated balance due notices at regular intervals, usually every 4-6 weeks. The notice will contain a payoff amount for your balance and instructions on how to pay the bill.
Requesting a Payoff Amount
There are several ways you can obtain your balance. The amount of time involved in obtaining the balance will depend on your chosen method.
Contacting your assigned IRS office
You can call the IRS office assigned to your account (which will be noted on the notice). You will have the opportunity to speak to an agent and receive the balance due over the phone.
Online IRS Account
The easiest and quickest way to obtain your balance is to go to IRS.gov and log into your online account. You will need to verify your identity to set up the account, but then you will have full access to your tax records and outstanding balances.
Contacting the Centralized Lien Operation
The Centralized Lien Operation has a direct number (1-800-913-6050) with shorter wait times than the general IRS phone line. You can speak to an agent about your account.
Getting Rid of an IRS Tax Lien
To remove the IRS Tax Lien from your account, you must fully satisfy the balance due. There are several ways that the lien may be satisfied.
Discharge of property
You can request the removal of a tax lien from a property so that the property can be transferred to a new owner without the burden of a lien. The IRS will carefully review the sale considerations before allowing the discharge. If you are selling the property, the IRS will request a portion (or all) of the proceeds from the sale to satisfy your balance due.
Subordination does not remove the tax lien. However, it means that the debt moves further down the priority list.
For example, suppose you have an IRS tax lien on your home, and you want to refinance to get a lower rate. You would need to get the IRS to agree to subordination with a new mortgage. The mortgage company would not agree to issue a new mortgage if they were secondary to the IRS if you failed to pay your outstanding tax debt, and the house was subject to foreclosure.
The IRS will withdraw a tax lien under certain circumstances, which are outlined in more detail below. A withdrawal can be obtained if the balance is paid in full, a payment plan is in place, you have reached an offer in compromise, or the collection period has expired.
Reasons the IRS Will Withdraw a Federal Tax Lien
There are several reasons the IRS will remove or withdraw a federal tax lien from your property.
Payment is made in full
If you pay the balance in full, the IRS will remove the tax lien from your property within 30 days of the payment.
A payment plan is in place
Setting up a payment plan allows you to make regular payments on your tax debt. The IRS will remove the tax lien if you make timely payments on your balance. You need to set up a Direct Debit Installment Agreement in which the IRS has permission to automatically pull money from your account each month until the balance is paid in full.
Payment of debt is guaranteed by a bond
You can purchase a bond that guarantees you will continue to pay the IRS. In this case, you are still responsible for repaying the debt, but the bond issuer guarantees that you will pay the debt. You will have to pay for the bond issuance, which increases your total cost, but the bond will allow you to ask the IRS to remove the tax lien from your property.
IRS has accepted an Offer in Compromise
The IRS allows taxpayers to settle their outstanding tax debt for less than the total amount using an offer in compromise. The offer in compromise amount is based on the amount the IRS expects that they can reasonably collect from you in the foreseeable future.
The IRS will remove that tax lien once you have paid the full amount of the offer in compromise (or set up a payment plan for that amount). If you need help preparing an offer in compromise, you can contact a tax professional such as Tax Shark to help you settle your debt with the IRS.
The collection period expired
The IRS has ten years to collect outstanding tax debts. The IRS tax liens include language that the lien expires once the 10-year collection period has finished.
Statute of Limitations Requesting Certification of Lien Release
The IRS has ten years to collect any outstanding balances due on your account (except in cases of fraud). A tax lien contains language that the lien automatically expires once the 10-year collection period ends. The ten-year period starts when the assessment is issued, not the original due date of the tax return.
What if I Need a Certificate of Release Immediately?
You should visit your local tax office if you have an immediate need for a Certificate of Release. You will need to bring proof that you paid the balance due, identification, and state why you need the Certificate.
Tax Lien vs. Tax Levy
A tax lien is a legal claim against your property that prevents you from selling the property without alerting the lien holder. A tax levy means that the IRS is going to seize your property (and sell it) to satisfy all or part of your balance due.
Tax levies are much rarer and are generally only used when taxpayers have large balances due but own luxury goods that have substantial resale value. Although that is the most common circumstance for a tax levy, the IRS has the right to claim any type of real or personal property to satisfy your tax debt.
Here are the answers to some common questions about IRS Notice 1450.
Most IRS tax liens are released within 30 days of the account being paid in full.
You have two options if the lien has not been released. You can contact the Collection Advisory Group or visit your local IRS office.
You can check the status of your lien using your online account at IRS.gov, or you can call the IRS to get a status update.
You receive a Notice 1450 when you have a tax lien on your account or have had one in the past.
After ten years, the IRS is required to release the lien. The language included in the original lien makes it automatically expire after ten years.