Federal Tax Lien and Notice of Federal Tax Lien: Release, Withdrawal, Discharge and Subordination

The lien and the filed notice are not the same thing.

IRC §6321 provides the foundation for the federal tax lien when the statutory conditions are met. A Notice of Federal Tax Lien is the public filing used in the federal priority system. Treating them as interchangeable creates bad remedy choices.

Start with the property interest.

State law generally identifies the taxpayer's property rights; federal law determines the federal tax consequences. Ownership, jointly held property, transfers and competing interests can therefore matter before selecting a lien remedy.

Release ends the lien under the applicable conditions.

A certificate of release under §6325 addresses the lien after the statutory requirements for release are met.

Withdrawal addresses the NFTL filing.

Withdrawal concerns the public notice and is not simply another word for releasing the underlying statutory lien.

Discharge addresses particular property.

A discharge can remove specified property from the lien while the taxpayer's liability and lien against other property continue.

Subordination changes priority.

Subordination can allow another creditor or interest to move ahead of the federal lien under the applicable statutory conditions without eliminating the lien itself.

Payment plans and CNC do not automatically erase lien issues.

A collection arrangement may change enforcement without producing the specific lien remedy a transaction or title problem requires.

An NFTL can create separate appeal rights.

Filing an NFTL can implicate IRC §6320 Collection Due Process procedures. Treat those deadlines separately from a request for release, withdrawal, discharge or subordination.

A lien is not a levy.

A lien is a legal claim against property interests. A levy is a collection action against property. The remedies and urgency differ.

The PRISM principle

“Get rid of the lien” is not a legal strategy until you identify what needs to change. Separate lien → NFTL → release → withdrawal → discharge → subordination.