The on-going COVID-19 pandemic has had a dramatic impact on the daily operations for the Internal Revenue Service (IRS). The IRS has appeared to have done its level best to provide taxpayers with options for securing vital documentation. Though, taxpayers attempting to obtain a lien release or certificate of discharge have experienced some delays in the past three months.
Generally, a federal tax lien is the government’s legal claim against a taxpayer’s property when they neglect or fail to pay a tax debt. The lien protects the government’s interest in all of the taxpayer’s property, including real estate, personal property, and financial assets. A federal tax
lien automatically exists after:
- The IRS puts the taxpayer’s balance due on its books;
- The IRS sends the taxpayer a bill that explains how much they owe (Notice and Demand for Payment); and,
- The taxpayer neglects or refuses to pay the debt in full by the date noted in the Notice and Demand for Payment.
This lien is also known as a “statutory lien.” After the statutory lien exists, and assuming the balance is more than $25,000.00, the IRS will usually file a public document called a Notice of Federal Tax Lien (NFTL) to alert creditors that the government has a legal right to the taxpayer’s
property. See Publication 594 for more information. The NFTL provides the IRS with priority against other creditors who file liens after the IRS files its NFTL. As a result, the NFTL will usually affect the taxpayer’s ability to sell their property. This is where securing a lien release or certificate of discharge of property from the NFTL can be so critical.
Shortly after the pandemic began, at the end of March of 2020, the IRS stopped processing mail-in applications for lien releases or certificates of discharge. That has not changed.
The IRS requests taxpayers use its e-fax line (844-201-8382) for lien releases and certificates of discharge. The IRS has confirmed that, for requests submitted that way, it has been able to timely process and respond with determinations. For more information on submitting such a request,
please refer to IRS Publication 4235.