When the IRS files a federal tax lien, they’ll send Letter 3172 as notification. This letter explains that your IRS tax debt has not been paid, and as a result, the IRS is filing a lien to collect what you owe.
Here is what you need to know about a notice of federal tax lien.
Why Did I Receive IRS Letter 3172?
The IRS sends an NFTL to notify you that they filed a tax lien against you. At this point, you already received numerous IRS notices about owing back taxes, and you still have not paid them. When this happens, the IRS will take legal steps to collect your outstanding tax debt, which can include filing a lien or taking money from your paycheck and bank account.
Letter 3172 notifies you that the IRS took action to file a lien. If you do not believe this is fair or accurate, you can request an appeal for this tax lien. Be sure to do that within 30 days of the date in the letter. Once you receive your tax lien letter, it will explain the steps to request an appeal hearing. This includes filing form 12153 Request for a Collection Due Process Hearing.
What Information Is In a 3172 Notice of Federal Tax Lien?
IRS 3172 notifies you as well as creditors, such as your home’s mortgage lender, that the IRS is taking action against you because of an unpaid tax debt. As mentioned above, your NFTL letter comes after several other notices in which the IRS alerts you that you still owe, what collection actions it is planning to take, and your taxpayer rights.
It will also explain how to file an NFTL appeal, which lien appeal form to submit, and where to send it.
Will the IRS Give Me a Chance to Pay Back Taxes Before Filing a Lien? What If I Can’t Pay?
The IRS typically works closely with taxpayers to pay their back taxes. Often, they will help create a payment plan for getting caught up on tax debt. However, if you do not follow through with this payment plan or you fail to make payment arrangements with the IRS, then you may face collection actions such as a tax lien.
The IRS always allows you to appeal a lien decision as long as you request it within 30 days of receiving letter 3172. Do not wait longer than this. If you do, you will not be able to appeal, and waiting may even impact your payment plan or request.
If I Get an IRS 3172 Notice, How Do I Remove the Lien?
There are some situations where a tax lien is placed on real property because taxes haven’t been paid for a long time. When this happens, the taxpayer must settle the full tax debt to have the lien removed. If you pay off the federal tax lien amount, the IRS will release the lien on your property within 30 days of payment.
Keep in mind, liens will only be released in situations where you have made payment in full per terms of your IRS payment plan. In some financial hardship situations, you may also be able to get rid of a lien by discharge of property, subordination, or withdrawal.
Can I Appeal a Tax Lien After the IRS Sends a 3172 NFTL Letter?
You have the right to appeal IRS letter 3172 when you receive it. The appeals process allows the tax court to examine the details of your lien case. You may be able to prove that you can make payments on time or set up an installment agreement during this process in order to have your lien removed. In some situations, the IRS will approve extensions to existing agreements.
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