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Published: April 14, 2022   |   Last Updated: May 26, 2022

Letter 3177

Special Condition Notice of Federal Tax Lien Filing – Third Party

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Letter Overview

You have been identified as a nominee or alter ego of a taxpayer with a balance on ayour tax account which hasyou have not been paid. and tThe IRS has filed a public document, the Notice of Federal Tax Lien (NFTL), with the local and/or state authorities to alert creditors that the government has a right to property specified in the notice or if none is specified, all of the property of that taxpayer being held in your name.your interests in any current and future property and assets. While NFTLs no longer appear on credit reports, they may still affect your ability to get credit if a potential creditor uses other resources, such as public records, to discover the NFTL.

This notice or letter may include additional topics that have not yet been covered here. Please check back frequently for updates.

What does this mean to me?

When the IRS files the NFTL as public record, it puts your creditors on notice that the IRS has a claim. While NFTLs no longer appear on credit reports, they may still affect your ability to get credit if a potential creditor uses other resources, such as public records, to discover the NFTL. The lien attaches to property specified in the notice or if none is specified, all of the property of the identified taxpayer being held in your name. For more information, refer to Publication 594, The IRS Collection Process (PDF).

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How did I get here?

You have  been identified as a nominee or alter ego of a taxpayer with a balance on a tax account which has not been paid and the IRS has filed a public document, the NFTL, with the local and/or state authorities to alert creditors that the government has a right to your interests in property specified in the notice or if none is specified, all of the property of the identified taxpayer being held in your name.


The IRS will issue a Certificate of Release of the Federal Tax Lien within 30 days of when:

  • the full amount of the tax debt, including penalties and interest, is paid,
  • it accepts a bond guaranteeing payment of the amount owed, or
  • it determines that the liability is not owed, or the liability has been reduced to zero.

Once a lien arises, the IRS generally can’t release it until you’ve paid the tax, penalties, interest, and recording fees in full or until the IRS is no longer legally able to collect the tax. However, in certain circumstances a lien may be withdrawn, discharged, or subordinated. Visit Liens on TAS Get Help for further information.

What are my next steps?

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You have the right to appeal

You have a right to appeal the filing of this Notice of Federal Tax Lien through the Collection Appeals Program.  If you disagree with the decision to file the NFTL, you can contact the phone number located on the letter and request to a manager’s conference.  If the manager sustains the decision, you can  submitted a request for Appeals consideration verbally, in writing, or via Form 9423 to the IRS employee within three business days of meeting.

See Publication 1660, Collection Appeal Rights, for a full explanation of the CAP.

 

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You have other options

The IRS will issue a Certificate of Release of the Federal Tax Lien within 30 days of when:

  • the full amount of the tax debt, including penalties and interest, is paid,
  • it accepts a bond guaranteeing payment of the amount owed,
  • it determines that the liability is not owed, or the liability has been reduced to zero, or
  • the IRS is no longer legally able to collect the tax.

In certain circumstances a lien may be withdrawn, discharged, or subordinated.

  • Requesting a Certificate of Discharge of Property from the Federal Tax Lien. The application process for a discharge is described in Publication 783, Instructions on How to Apply for a Certificate of Discharge of Property from Federal Tax Lien.
  • Requesting a Withdrawal of the Filed Notice of Federal Tax Lien. This application process, including the conditions under which a withdrawal may be issued, is described in Form 12277, Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien (Internal Revenue Code Section 6323(j)).
  • Applying for subordination of the Notice of Federal Tax Lien. If approved, this would make the IRS lien secondary to the interest of another creditor, such as a lending institution. Follow the directions in Publication 784, How to Prepare an Application for a Certificate of Subordination of Federal Tax Lien. You should also file a Form 14134, Application for Certificate of Subordination of Federal Tax Lien, with your request.

Visit Liens on TAS Get Help for further information.

Where can I get additional help?

Understanding your notice or letter

Get Help topics

Browse common tax issues and situations at Get Help on the Taxpayer Advocate Service’s website

If you still need help

The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn’t working as it should. If you qualify for our assistance, which is always free, we will do everything possible to help you.

Visit www.taxpayeradvocate.irs.gov or call 1-877-777-4778.

Low Income Taxpayer Clinics (LITCs) are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page on the TAS website or Publication 4134, Low Income Taxpayer Clinic List.

Related Letters & Forms

NFTL Filed (in Public Records)

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Special Condition Notice of Federal Tax Lien Filing – Third Party , Letter 3177

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