Remove an IRS Tax Lien

There are a few perfectly legitimate ways to appeal to remove a tax lien if you know where to start.

You can get the IRS to remove Notice of Federal Tax Lien if you can show that the IRS was in the wrong. A lien can be removed with tax resolution on appeal if:

• The back taxes have already been paid in full.
• The lien was filed in error.
• The lien was filed in error and the IRS made a processing error with your return.
• The IRS did not follow proper procedures.
• You were going through bankruptcy when the lien was filed.
• You weren’t given a chance to dispute the amount assessed by the IRS.
• You wish to make spousal defenses by claiming that your spouse should be liable for the lien.
• You want to discuss collection options, like through the Fresh Start Initiative.
• The statute of limitations, typically 10 years, has expired on the unpaid taxes.

On the notice of the lien, you are given the option to request a Collection Due Process hearing with the Office of Appeals. The request for an appeal must be made within 30 days after the fifth day of the lien being filed, or by the date indicated on the notice.

We can deal with the IRS and provide assistance with filing an appeal or requesting a lien withdrawal.

Yes, a new tax lien policy allowing for “withdrawal” gives hope to many struggling taxpayers. Withdrawal removes the lien as if it were never there, and occurs when the taxpayer’s lien is paid off, or it’s proven that the lien was filed falsely. Withdrawal is also possible if you qualify for the Fresh Start Initiative, have entered a direct debit agreement, and your balance is lower than $25,000.

In order to complete an official withdrawal of a lien, the taxpayer must make a formal request to the IRS (using IRS Form 12277, also known as Application for Withdrawal of Filed Form 668(y), Notice of Federal Lien). Once this request is filed, the IRS will return form 10916(c), which is the magic word to open the door to cleared credit.

It is important to note that this new policy does not include tax liens held at the state level. Those liens will still be evident on your credit reports. Also, not subject to complete withdrawal are tax settlements.

Such settlements, commonly called “Offers in Compromise,” are present when a taxpayer and the IRS settle on terms of a lien where less than what is actually owed is considered adequate payment. Due to this not being an exact repayment in full, the IRS grants what they call a “release” rather than an actual withdrawal.

A lien that has been “released” means that it’s no longer attached to your property and assets, and public records will reflect the change. But unlike a withdrawal, a release will remain on your credit report for up to ten years after the taxes have been paid.

The same as with a withdrawal, if you qualify for FSI and your balance is below $25,000, you can request that the lien be released. Otherwise, once your tax liabilities have been paid in full, or you’ve arranged a streamlined installment agreement, your lien will be released after 30 days.

Once you receive a copy of the lien release, you can use it to update your credit report with the credit reporting bureaus.

Another common term in lien removal is subordination, which allows another creditor to “subordinate” the IRS’ interest in a property and move ahead of the line. The IRS will only permit this if it will help them get paid more or sooner. For example: if you are trying to refinance your home, the IRS will allow a lender to go above the lien and refinance in exchange for a cut of the proceeds.

This process is complicated, though, and professional assistance is always recommended.

Pay your taxes in full and on time! File your taxes before the IRS has the time, or the reason, to send an IRS rep out to file a tax lien against you at your local courthouse.

Easier said than done, right? Well, there are a few ways you can prevent a tax lien if you can’t pay your taxes on time.

• DO NOT ignore or misplace any notices or letters the IRS sends.
• DO keep track of your tax status, and keep all your records in a safe, secure place.
• DO respond quickly to any notices, either by phone, mail, or fax. Wait too long and the IRS might feel you are trying to avoid paying your taxes and file a lien.
• DO contact the IRS immediately if you believe the tax lien was filed in error.
• DO arrange for an extension if you cannot pay your tax bill by April 15th.
• DO set up an installment agreement with the IRS if you cannot pay in one full payment. If the IRS knows that you have negotiated an installment plan, they will not file a lien against you. If you fail to pay on schedule, you’ll lose your credibility with the IRS and they’ll file a lien against you immediately.
• DO contact a professional tax attorney for tax resolution if you are wary of working directly with the IRS. They can explain your options, and your next steps, and help you set up any payment plans or extensions with the IRS. They can also help you file an appeal if a lien was filed erroneously.