IRS Letter 3172 informs taxpayers that the IRS has filed a Notice of Federal Tax Lien on their property due to unpaid tax debt. A tax lien is the government’s legal claim on a taxpayer’s property, including real estate, vehicles, and other assets, which serves as security for the outstanding tax debt.
The filing of a lien can negatively affect the taxpayer’s credit and may limit their ability to sell or transfer property. IRS Letter 3172 also notifies taxpayers of their right to request a Collection Due Process (CDP) hearing within 30 days of receiving the notice. This hearing gives the taxpayer an opportunity to dispute the lien, request alternative payment arrangements, or provide evidence of financial hardship.
To avoid or remove a lien, taxpayers can:
- Pay the full amount owed, including any penalties and interest.
- Enter into an Installment Agreement or submit an Offer in Compromise.
- Request a Lien Withdrawal if the lien was filed in error.
It’s important to take action upon receiving Letter 3172, as failing to address the lien can lead to further enforcement actions, such as the seizure of property.