When does a Federal tax lien expire and become unenforceable?
IRS tax liens are not forever. They do expire – here is an overview of when:
For starters, the IRS has 10 years to pursue you for the unpaid taxes that caused the lien to be filed. The 10 years starts on the date you began owing the IRS money.
After the 10 year collection timeframe expires, so does the IRS tax lien.
But beware: Sometimes you might do something that gives the IRS more time to collect. This can have an impact on a Federal tax lien.
Actions that can extend the IRS collection timeframe include the filing of bankruptcy, collection due process appeals or submitting an offer in compromise or innocent spouse claim. These actions stop the IRS from collecting. Because of that, this time is added back on to the collection statute.
The tax lien will still expire at the end of 10 years – even if the IRS has more than 10 years to collect – unless the IRS timely refiles the lien.
If the IRS timely refiles the tax lien, it is treated as continuation of the initial lien.
The refiled tax lien will be valid for the extended timeframe the IRS has to collect – it is good for the extra time you gave the IRS to collect. It maintains any priority it has against liens of other creditors. See Internal Revenue Code 6323(g)(3) and Internal Revenue Manual 22.214.171.124.3.
However, if the IRS does not refile the tax lien within 30 days per IRC 6323(g)(3), the original lien expires and is no longer valid.
If the IRS refiles the tax lien after 30 days, then it is still a valid lien, but it is not considered a continuation of the original lien because it was filed late. It is a new lien, and its priority against other creditors starts on the day it is filed. The IRS will have lost any higher ground it had over other creditors. Other creditor’s liens now jump ahead of the IRS.
For more on the IRS statute of limitations on collection, see my prior posts.