IRS Letter 3172: How to Resolve a Federal Tax Lien

Receiving a notice from the IRS can be a stressful experience. One of the most serious notices a taxpayer can receive is an IRS Letter 3172, officially titled "Notice of Federal Tax Lien Filing and Your Right to a Hearing." This letter signifies that the IRS has taken a significant step in its collection process by filing a public notice of your tax liability.

What is a Federal Tax Lien? 

A federal tax lien is the government's legal claim against your property when you neglect or fail to pay a tax liability. The lien protects the government's interest in all your property, including real estate, personal property, and financial assets. It's important to understand that the lien itself does not seize your property. Instead, it establishes the government's right to your property as collateral for the tax liability. The lien attaches to all your current and future assets, and it can follow your property even if you sell or transfer it. 

Why Did I Receive Letter 3172? 

The IRS sends Letter 3172 to inform you that it has filed a Notice of Federal Tax Lien (NFTL) in the public records. The NFTL is a public document that alerts creditors that the government has a claim against your property. The IRS files an NFTL after it has assessed the tax liability, sent you a Notice and Demand for Payment, and you have failed to pay the tax in full. The purpose of Letter 3172 is to notify you of the lien filing and to inform you of your right to a hearing to appeal the filing. 

Consequences of a Federal Tax Lien 

A federal tax lien can have severe and far-reaching consequences that can impact your financial life and personal freedom. Here are some of the most significant impacts: 

• Credit Impact: While NFTLs no longer appear on credit reports from the three major credit bureaus, potential lenders, business partners, and other financial institutions can still discover the lien through public record searches. This can make it difficult to obtain credit, loans, or even a lease. 

• Property Impact: The lien attaches to all your property, making it difficult to sell or refinance your assets. Any proceeds from the sale of your property may be subject to the government's claim. 

• Business Impact: If you are a business owner, a tax lien can harm your business' reputation and make it difficult to secure financing or conduct business with other companies. 

• Passport Revocation: If you have a seriously delinquent tax, the IRS can certify your tax liability to the US State Department, which can then deny your passport application or revoke your existing passport. A seriously delinquent tax debt is a tax liability over $66,000 in 2026 (this amount is adjusted for inflation). 

Your Rights and Options 

Upon receiving IRS Letter 3172, it is crucial to act promptly. You have several rights and options available to you to address the tax lien. The most important of these is your right to a Collection Due Process (CDP) hearing. 

Collection Due Process (CDP) Hearing 

You have the right to request a CDP hearing with the IRS Independent Office of Appeals within 30 days of the date of Letter 3172. The CDP hearing is a critical opportunity to resolve your tax issue. During the hearing, you can discuss: 

• Collection Alternatives: You can propose collection alternatives such as an installment agreement, an offer in compromise, or having your account declared currently not collectible. 

• Appropriateness of the Lien: You can challenge the appropriateness of the lien filing and argue that it is overly intrusive. 

• Underlying Liability: In limited circumstances, you may be able to challenge the amount of the tax you owe. This is generally only possible if you did not have a prior opportunity to do so. 

• To request a CDP hearing, you must complete and mail Form 12153, "Request for a Collection Due Process or Equivalent Hearing." It is highly recommended to seek professional guidance when preparing for a CDP hearing. 

Other Lien Relief Options 

Even if you miss the 30-day deadline for a CDP hearing, you still have options to address the tax lien: 

Option	Description
Lien Withdrawal	The IRS may agree to withdraw the NFTL, which makes it as if the lien was never filed. This can be an option if the lien was filed prematurely, if you enter into an installment agreement, or if withdrawal is in the best interest of both you and the government.
Lien Discharge	A discharge removes the lien from a specific piece of property, allowing you to sell or transfer it. This is often used when selling a home.
Lien Subordination	Subordination does not remove the lien, but it allows another creditor to move ahead of the IRS in priority. This can make it easier to get a loan or mortgage.

Take Action Now! 

Receiving IRS Letter 3172 is a serious matter that requires your immediate attention. Ignoring it will only lead to more severe collection actions, such as a levy on your bank account or wages. By understanding your rights and taking proactive steps, you can resolve your tax liability and get your financial life back on track. 

Scan the QR code or click the button below to watch our free video to learn even more tips on how to handle IRS tax problems. 

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If you have received IRS Letter 3172 or are struggling with a tax liability, don't face the IRS alone. We can help you understand your options and represent you before the IRS. Contact us today to schedule a consultation.