Does the IRS Refile a Tax Lien After 10 Years? Taxpayers collectively owe the US government over $114 billion in back taxes – including hundreds of thousands of federal employees. However, just because the tax gap is substantial doesn’t mean that the IRS isn’t doing anything about it. In addition to ramping up audits in the past few years, the IRS continues to penalize late filers and late payments through federal tax liens and tax levies.
Tax levies are straightforward – if you owe the IRS enough money for long enough, they will begin taking things away from you until your back taxes are paid. That could mean taking your car, your home, or a portion of every paycheck.
A federal tax lien is a little bit more complicated. When the IRS issues a federal tax line, it does not take anything – at least, not directly. Instead, a federal tax lien is a public notice that is meant to signal to other potential creditors that the IRS’ debt is secured with your assets and belongings.
This means you cannot secure any other current or future debts until you pay off your back taxes – and it means that if you sell or liquidate any of your assets, using the money to pay your debt with the government becomes a top priority.
The question then becomes – how long does a tax lien last? And can the IRS decide to refile a tax lien on an old tax debt? Gain answers to the question “Does the IRS file a tax lien after 10 years” below:
What is a Tax Lien?
A federal tax lien is a legal claim on your property. Unlike a notice of levy, which is sent to your front door, a federal tax lien is a public notice. While you will be one of the first people to find out about it, it’s also important to the IRS that other potential creditors find out about it as well.
In the past, a notice of federal tax lien could land a death blow to your credit score – as bad as a total bankruptcy and lasting just as long. It wasn’t until 2018 that the major credit reporting agencies stopped including tax liens in credit scores. However, that doesn’t stop creditors themselves from taking notice, making it difficult to score any financing while indebted to the IRS.
When is a Tax Lien Lifted?
A federal tax lien is only lifted under three circumstances:
- You have not defaulted on any payments in at least three years, haven’t been on the IRS’ radar in the same amount of time, and have been making consistent payments as per an agreement plan.
- Your tax debt has been completely paid, and the debt does not need to be secured any longer.
- The lien was issued in error, and you do not actually owe any tax debt.
If you need the IRS to release a lien conditionally – for example, to allow you to pay off another debt – you must seek a lien discharge or a lien subordination. A lien discharge removes the lien from a single asset, which you can use to secure a different debt or sell. A lien subordination places the other creditor ahead of the IRS. To successfully seek out either, you need to prove that subordinating or discharging the lien somehow helps you make payments to the IRS faster.
How Long Can a Tax Lien Last?
A federal tax lien requires a federal tax debt. However, tax debts have expiration dates. The expiration date of a tax debt is called the Collection Statute Expiration Date, and it is determined by the assessment date on the first notice of your tax debt. The assessment date is the day the IRS realized that you owe money.
To begin with, the CSED is calculated as 10 years after the initial assessment date. However, that date may either be pushed forward or added to through tolling periods. The most common tolling periods include:
- Bankruptcy – if you file for bankruptcy, the timer on the clock is stopped for the entire bankruptcy process, plus an additional six months after your bankruptcy has concluded.
- A Collection Due Process hearing – if you request a hearing to appeal the IRS’ decision to use a federal tax lien, or to appeal the debt itself, the timer on the debt clock is stopped.
- An offer in compromise – deliberation of any payment plan (including an offer in compromise) stops the clock on your tax debt.
- Seeking innocent spouse relief – the statute of limitations on your debt is stalled if you request innocent spouse relief for your tax debt, until the request is resolved.
- Spending time abroad – more than six months spent abroad causes the IRS to stop the clock on your debt timer and add time to it after you return.
- Agreeing to an extension of the tax debt clock in a payment plan.
If a tax debt has expired, the tax lien expires with it. If you have owed a tax debt for over a decade, and all applicable tolling periods have run out, the IRS cannot issue a tax lien for it – because the debt is no longer valid.
However, don’t hold your breath. The IRS tends to become more aggressive about debt collection the closer a tax is to expiring. If your tax debt is about to expire, chances are the IRS will pursue methods to prolong the CSED, and refile your tax lien.
Intentionally avoiding tax payments is illegal. The IRS can charge you with tax evasion if it believes you to be avoiding your tax debt, or fine you heavily. However, the threat of a lien or use of a tax levy is often more effective, so the IRS generally does not put people in prison unless they’re willfully committing tax fraud.
Does the IRS refile a tax lien after 10 years? If it’s been 10 years since the IRS first told you about your tax debt, there is a chance that it will have expired. But because the IRS can stall or stop the timer and extend the CSED in many different ways, it’s important to be sure. Contact the IRS or work with a tax lawyer to calculate your current CSED, and determine whether you are eligible for a partial payment plan. Contact Rush Tax Resolution today to learn more!