• Jayson M. Thornton

How to Remove a Tax Lien

What is a Federal Tax Lien?

The Internal Revenue Service routinely files Federal Tax Liens against taxpayers who have unpaid tax obligations. A federal tax lien is a document filed with a county government (usually where the taxpayer lives or conducts business) notifying the general public that a taxpayer has an unpaid federal tax debt. Liens attach to the taxpayer's property (both real property and personal property).

Removing a Lien The IRS will remove a federal tax lien if the lien was filed in error, if the outstanding balance is paid in full, if the outstanding balance is otherwise satisfied (for example through a successful offer in compromise), or if the lien becomes unenforceable (for example, because the lien has expired due to the ten-year statute of limitations). There are two basic ways to remove a federal tax lien: withdrawal and release.

Withdrawing a federal tax lien means the IRS will rescind the lien, as if the lien was never filed in the first place. Lien withdrawals generally occur when the federal tax lien was filed in error (for example, if a lien was filed against the wrong person). If a lien was filed in error, you should contact the IRS right away. An IRS agent will review your account history to verify that you don't owe the outstanding tax, and will prepare the paperwork necessary to withdraw the lien. However, the IRS has instituted a fresh start program under which taxpayers may be eligible for lien withdrawal provided certain criteria are met.

Releasing a federal lien means that the lien no longer encumbers your property. Upon releasing a lien, county records will be updated to reflect that the lien has been released. However the fact that there was once a federal tax lien will remain on your credit report for up to ten years. Liens are released within 30 days of full payment of the outstanding tax obligations or upon setting up a guaranteed or streamlined installment agreement. Less frequently, the IRS may release a federal tax lien if that will speed up the collection of tax or is in the best interests of the taxpayer and the government. Most federal tax liens are automatically released by the IRS after full payment of tax. The IRS should provide you with a copy of the lien release, which you can forward to the credit reporting bureaus to update your credit reports.

Under the IRS's fresh start program, taxpayers may be eligible for lien withdrawal or release if their outstanding balance is under $25,000.

For more information contact Accountant Jayson M. Thornton 314-394-8588

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