What Happens to an IRS Lien When Someone Dies?

Navigating the Complexities of Estate Administration and Tax Liens

The death of a loved one brings forth a multitude of legal and financial complexities, including the administration of their estate and the resolution of any outstanding tax liabilities. If the deceased individual had an unpaid tax debt and the IRS had filed a lien against their property, understanding the implications and options available becomes crucial.

IRS Liens: A Primer

An IRS lien is a legal claim against a taxpayer’s property, securing the payment of unpaid taxes. It attaches to all of the taxpayer’s assets, including real estate, vehicles, and personal belongings. Once a lien is filed, the IRS has the right to seize and sell the property to satisfy the tax debt.

Impact of Death on IRS Liens

The death of a taxpayer does not automatically extinguish an IRS lien. The lien remains attached to the deceased individual’s property and becomes the responsibility of their estate. The estate executor or administrator is tasked with resolving the tax debt and removing the lien to facilitate the distribution of assets to beneficiaries.

Options for Lien Removal

Depending on the circumstances, there are several options available to remove an IRS lien from a deceased person’s property:

  1. Payoff the Tax Debt: If the estate has sufficient funds, it can pay off the tax debt in full. Once the debt is satisfied, the IRS will release the lien.

  2. Apply for Lien Discharge: If the estate does not have enough funds to pay off the debt, the executor or administrator can apply for a lien discharge. The IRS may consider discharging the lien if:

    • The estate is insolvent and there are no other assets to satisfy the debt.
    • The property is essential for the support of the deceased individual’s dependents.
    • The lien is causing undue hardship to the estate or beneficiaries.
  3. Sell the Property: The estate can sell the property subject to the lien. The proceeds from the sale can be used to pay off the tax debt, and the lien will be released from the property. However, the buyer will take title to the property subject to the lien unless they agree to pay off the debt as part of the purchase agreement.

Special Considerations for Estate Tax Liens

In addition to regular IRS liens, there is also a specific type of lien known as an estate tax lien. This lien attaches to all of the assets in a deceased individual’s gross estate, regardless of whether the estate is required to file an estate tax return. The estate tax lien remains in effect until the estate tax liability is paid or the statute of limitations expires.

To remove an estate tax lien, the executor or administrator can apply for a certificate discharging the property from the lien. This certificate is available if:

  • The estate has paid all estate taxes due.
  • The estate is not required to file an estate tax return.
  • The property is being transferred to a qualified heir or charity.

Seeking Professional Guidance

Navigating the complexities of IRS liens and estate administration can be challenging. It is highly advisable to seek the guidance of an experienced estate attorney or tax professional to ensure that the estate’s obligations are met and the lien is removed efficiently and effectively.

Does a Lien Go Away After Death?


Do IRS liens expire at death?

The lien itself is not extinguished by a taxpayer’s death. Therefore, an issue arises as to what assets are subject to the tax lien relating to the income taxes the decedent had owed before he passed away. The federal tax lien attaches to “all property and rights to property” of the person liable for the tax.

What happens if a deceased person owes the IRS?

Can a Deceased Person Owe Taxes? Decedents can remain accountable to creditors, including the IRS, because the person’s rights, liabilities, assets and interests transfer to their estate when they pass away. So when a person passes away, the executors or administrators of their estate step into their shoes.

Can the IRS put a lien on inherited property?

If there’s a Form 706 or Form 706-NA, United States Estate Tax Return, filing requirement, a federal estate tax lien attaches to all of the deceased person’s gross estate.

Can you inherit debt from the IRS?

The debt becomes an obligation of the deceased’s estate, which is subject to an IRS lien. If the estate includes a home or other property, the lien will reflect that. The bad news is, none of the estate’s assets can be distributed to beneficiaries or used to pay off debts.

Does the IRS have a tax lien on a deceased person?

A public records search may reveal that the IRS has already filed a Notice of Federal Tax Lien against the deceased’s home, vacation property, car or other property. The tax lien is official notice that the deceased owes back taxes. The outstanding amount will be deducted from the proceeds to pay the taxes when the property is sold.

What happens if I don’t satisfy an IRS tax lien on my property?

If you don’t pay or make arrangements to settle your tax debt, the IRS can **levy, seize and sell any type of real or personal property** that you own or have an interest in . A federal tax lien

How long does a tax lien last if a person dies?

“Lapse of time” means 10 years, during which the IRS has not attempted to collect the tax either by suit or distraint. IRC § 6322. The lien itself is not extinguished by a taxpayer’s death. Therefore, an issue arises as to what assets are subject to the tax lien relating to the income taxes the decedent had owed before he passed away.

How do I pay off a tax lien if a person dies?

If the IRS has filed a Notice of Federal Tax Lien PDF, there will be a notice in the public records. If you’re selling the deceased person’s property and the sale proceeds fully pay the deceased persons liability shown on the lien, contact the IRS Lien Unit for a payoff.

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