Get Publication 4235 (rev. 10-2024)

Background. The IRS defines default of an installment agreement as providing inaccurate or incomplete information, or not meeting required terms of the agreement. In this case, the IRS may propose termination of installment agreement and terminated installment agreements.

If the IRS approves an installment agreement, it will generally keep any tax refunds and apply them to your debt. If the IRS agrees to an installment agreement, it may still file a Notice of Federal Tax Lien.

If you enter into an installment plan, the IRS won't file a tax lien. Tax bills of $10,000 or less allow you to enter into a guaranteed installment agreement. And tax bills of $25,000 or less allow you to enter into a streamlined installment agreement.

A federal tax lien usually releases automatically 10 years after a tax is assessed if the statutory period for collection has not been extended and the IRS does not extend the effect of the Notice of Federal Tax Lien by refiling it.

A lien secures the government's interest in your property when you don't pay your tax debt. A levy actually takes the property to pay the tax debt. 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.

When the levy is on a bank account, the Internal Revenue Code (IRC) provides a 21-day waiting period for complying with the levy. The waiting period is intended to allow you time to contact the IRS and arrange to pay the tax or notify the IRS of errors in the levy. Generally, IRS levies are delivered via the mail.

A federal tax lien arises automatically if you don't pay the amount due after receiving your first bill. The government also may file a Notice of Federal Tax Lien (NFTL) in the public records. If the IRS files a NFTL, it may be difficult to sell or borrow against your property.