Have a Tax Question? Ask a Tax Expert
A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets. A federal tax lien exists after the IRS:
The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.
Even after the IRS releases the lien, it will be on the credit report as "released" for seven years.
Let me know if you need any help.
1. Does that mean the money does not have to be paid back; if its removed after ten years, but will still be on the credit report for another 7 years?
Not exactly. There is a statute of limitations for collections and that is 10 years but a lien can last for 20 years and once placed is active unless removed. The IRS can also renew the lien before it actually expires. In short once a lien is placed until the debt is satisfied the lien can be renewed.
The judgment lien is effective, unless satisfied, for 20 years. Upon court approval, the judgment lien may be renewed for one additional period of 20 years by filing a notice of renewal. 28 USC § 3201.
If the tax debt were paid by her previous spouse then the lien would be released and removed from the reporting but the credit bureau would show it for 7 years as having been Released.The statute of limitations for collection is found in IRC § 6502. IRC §§ 6502 and 6503 for lists of events which suspend (really prolong) the normal limitation periods.