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IRS Letter 3172: Federal Tax Lien Notice, What to Do
Short answer: IRS Letter 3172 is the Notice of Federal Tax Lien Filing and Your Right to a Hearing. It tells you the IRS has filed a public lien for unpaid tax, and it gives you 30 days to ask for a Collection Due Process hearing. All State Tax Resolution, led by Sabih Shafi, an Enrolled Agent, helps clients meet that deadline and pursue lien withdrawal, release, discharge or subordination.
Key takeaways
Letter 3172 means a Notice of Federal Tax Lien has been filed. The IRS must send it within 5 business days after the filing.
You then have 30 days, after that 5-day period, to request a hearing. The letter shows the date the 30 days expire.
Request the hearing on Form 12153. Normally there is no levy action during the hearing period and the hearing itself.
A lien is not a levy. It secures the IRS claim against your property. A levy takes property.
Paying in full is the best way to get rid of a lien. The IRS releases it within 30 days after you pay.
What Letter 3172 is
The IRS describes Letter 3172 as the Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320. Publication 1660 says the IRS must notify you the first time it files a Notice of Federal Tax Lien for each tax and period. It must do so within 5 business days after the filing.
This is different from earlier reminder notices, which warn the IRS may file a lien. Letter 3172 means it has.
How a lien comes to exist
The IRS says a federal tax lien is the government's legal claim against your property when you neglect or fail to pay a tax debt. It exists after three things happen:
The IRS assesses your liability.
The IRS sends you a bill, the Notice and Demand for Payment.
You neglect or refuse to pay in full in time.
The Notice of Federal Tax Lien is the public document the IRS files to alert creditors. Tax Topic 201 says the lien itself arises automatically when the IRS sends the first notice demanding payment and you fail to pay in full. Filing the public notice is a separate step.
What a lien does
Assets: it attaches to all your assets, including property, securities and vehicles, and to assets you acquire while the lien lasts.
Credit: the IRS says it may limit your ability to get credit. It also says a filed lien no longer appears on major credit reports.
Business: it attaches to all business property and rights to business property, including accounts receivable.
Bankruptcy: if you file for bankruptcy, the tax debt, lien and notice may continue after it.
A lien is not a levy. A levy actually takes the property to pay the tax debt. Publication 1660 says that normally there is no levy action during the period you have to request a hearing from a lien notice, or during the related hearing.
The 30-day clock
Publication 1660 says that after the 5-day notice period you have 30 days to request a hearing with Appeals. The lien notice you receive indicates the date this 30-day period expires. Your request must be postmarked on or before the date shown in the lien notice.
Publication 1660 says that contacting the IRS to work out a solution does not extend the 30-day period for a written hearing request. It also says the Taxpayer Advocate Service cannot extend it.
How to request the hearing
Use Form 12153, Request for a Collection Due Process or Equivalent Hearing. Check the box for the Filed Notice of Federal Tax Lien. Send it to the hearing address on your notice, not the payment address, with a copy of the notice. You must give a reason.
Form 12153 lists lien resolutions you can ask for:
Withdrawal: the IRS removes the lien notice from the public record because you believe it should not have been filed. Your debt still exists.
Subordination: the IRS makes its lien secondary to another creditor's lien.
Release: the IRS removes the lien after you pay in full or complete the terms of an accepted Offer in Compromise.
Discharge: the IRS removes the lien from one specific property.
Publication 1660 also lists collection alternatives, such as an installment agreement or an Offer in Compromise, spousal defenses, and economic hardship as issues you can raise.
Disputing the amount
The IRS says that in a CDP hearing you can discuss the existence or amount of your tax debt only in limited circumstances. In general, you can raise it if you did not receive a notice of deficiency or did not have another chance to dispute the debt. If Appeals cannot consider it, the IRS gives three ways to reopen the question: pay in full and file a claim for refund, request an audit reconsideration with new information, or file an Offer in Compromise based on doubt as to liability.
What a timely hearing request does
Publication 1660 says that if your request for a CDP hearing is timely, the 10-year period the IRS has to collect your taxes is suspended until Appeals' determination is final or you withdraw the request in writing. After the hearing, Appeals issues a determination letter, and you can ask the U.S. Tax Court to review it within the time shown in the letter.
If you miss the 30 days
You can still ask for an equivalent hearing for a lien notice within one year plus five business days from the date the lien was filed. Form 12153 says an equivalent hearing does not suspend the 10-year collection period, and you cannot go to court over the result.
The Collection Appeals Program is another route. Publication 1660 says CAP covers the filing of a Notice of Federal Tax Lien, before or after it is filed, and denied requests for withdrawal, discharge or subordination. The IRS says taking part in one type of hearing can prevent certain issues from being heard in a second.
Getting the lien withdrawn or released
The IRS says it releases the lien within 30 days after you pay in full. Other options exist if you cannot pay in full:
Direct debit withdrawal. The IRS says it may withdraw the notice if you are in a direct debit installment agreement. It lists general eligibility rules, including owing $25,000 or less, paying in full within 60 months or before the collection period ends, full compliance with other filing and payment requirements, and three consecutive direct debit payments. If you owe more, you may pay down to $25,000 first.
Withdrawal after release. If the debt is paid and the lien released, you may qualify to withdraw the public notice if you are in compliance for the past three years.
Offer in Compromise. The IRS says it does not release liens until the terms of an accepted offer are met.
Currently not collectible status does not stop a lien. The IRS says it may file a Notice of Federal Tax Lien even while an account is in that status.
How we help
I am Sabih Shafi, an IRS Enrolled Agent. We work with clients nationwide and abroad, by phone and video, in English or Spanish.
Deadline check: we read the date on your letter and mark the last day to request a hearing.
Form 12153: we prepare the request and the supporting financial statement.
Lien options: we ask for withdrawal, release, discharge or subordination when your facts fit.
Representation: with a signed Form 2848, the IRS can talk to me instead of you.
A flat fee quoted in writing before work starts.
Frequently Asked Questions
What does IRS Letter 3172 mean?
It means the IRS has filed a Notice of Federal Tax Lien against you for an unpaid tax debt. The letter also tells you about your right to a hearing. The IRS must send it within 5 business days after the filing.
How long do I have to respond to Letter 3172?
You have 30 days after the 5-day notice period to request a CDP hearing. The letter shows the date the 30 days expire. Your request must be postmarked on or before that date.
Will the IRS take my bank account because of a lien?
A lien is not a levy. The lien secures the government's claim, and a levy takes property. Publication 1660 says there is normally no levy action while you can request a lien hearing and during that hearing.
Does a tax lien hurt my credit?
The IRS says a lien may limit your ability to get credit. It also says a filed lien no longer appears on major credit reports.
How do I get the lien removed?
Paying in full is the best way, and the IRS releases the lien within 30 days of payment. If you cannot pay in full, there are other options. A withdrawal removes the public notice. A discharge removes the lien from specific property. A subordination does not remove the lien, but it lets other creditors move ahead of the IRS. Each has its own rules.
Can I sell my house with a federal tax lien on it?
A lien attaches to your real estate. The IRS offers a discharge for specific property and a subordination that lets other creditors move ahead of the IRS. Ask about these before you sign a sale or loan contract.
General information, not tax advice for your situation.
Related Reading
Talk to an Enrolled Agent
This article is general information, not individual tax advice. If you want to talk through your own IRS or state balance, book a free 20-minute review or call or text us directly.
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