If the Internal Revenue Service (IRS) has placed a tax lien on your property, once you've satisfied the debt, the IRS should notify you that the lien has been removed. To do so, the IRS should send you a “Certificate of Release of Federal Tax Lien,” also known as Form 668(Z). But you may still wonder what that really means. So here are a few answers to our clients' most commonly asked questions about the release.
Does The Certificate Erase the Recorded Lien?
Not exactly. The IRS doesn't automatically remove the lien. Instead, the agency records the certificate so that the property history includes the lien and its removal. If you want the IRS to remove the lien record, that's possible, but there is a special process.
When Should I Receive a Certificate?
The Internal Revenue Code requires that the IRS sends a Certificate of Release within 30 days of any of the following:
- You've satisfied the debt
- The IRS has accepted a bond
- The tax debt becomes legally unenforceable
Does How I Paid the Tax Debt Impact the Timeline?
Yes, your method of payment does impact the 30-day timeline. For example, if you pay by a certified method, such as cash or a cashier's check, or an electronic transfer, then the date of payment immediately begins the 30-day period. However, if you pay with a personal check, the 30 days don't begin until 15 days after payment is received.
In some situations—such as when the IRS accepts an offer-in-compromise, if the IRS has determined someone is an innocent spouse, or if the discharge is related to bankruptcy—that can also affect the 30-day period.
What Happens If I Need It Sooner, or the IRS Doesn't Send It?
In most cases, the IRS has an automated system that sends the Certificates to you and the relevant county recorder's office. The IRS can also have its staff manually send the notice if it realizes there is something particular in the file that will prevent the automatic transmission or if the 30 days have already expired and it still hasn't been released.
But the IRS may have staff personally issue a certificate sooner if you, your representative, or someone with an interest in the property files a request for an immediate release of the lien.
If the IRS still doesn't release the lien, you can sue them for failing to do so.
In other words, if you have a tax-related lien on your property, or any outstanding tax issues, you don't want to wait to see how things play out. If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.