Removing An IRS Tax Lien

Removing An IRS Tax Lien

This can be done with an installment plan or a settlement with the IRS, such as an Offer-In-Compromise.

Basically, after you pay off the IRS debt, you should receive an IRS Certificate of Release of Federal Tax Lien. But if this does not happen, then be proactive, such as by filing Form 668(Z). You should also contact the credit agencies and local counties to notify them that the lien has been released.

Yet there is a hitch: The release means that the lien will no longer impact the sale of an asset. However, the filing will still appear on your credit report! This lasts for 7 years from the time of the filing.

Harsh, huh? Definitely. But there is something to help out, which we’ll take a look at next.

#3 – IRS Fresh Start Program

The IRS launched this in response to the financial crisis (it was focused on those with tax debts of $25,000 or less). Basically, if you meet certain requirements, a federal tax lien will be withdrawn. It’s as if it never existed!

So here are the requirements:

  • You have resolved the tax debt and the lien has been released
  • If you have an installment plan, then you must use direct debits from your bank account and have made three payments (you also may not have defaulted on a prior installment agreement)
  • You are in compliance with all your tax filings (for the past three years)
  • You are current with all estimated tax payments

If you meet the above, then you will send out Form 12277. And if the IRS agrees, the agency will record Form 109169(c) with the local county office and you’ll get a copy too. Oh, and make sure you notify the credit agencies, just as you would if you disputed an item on your credit report.

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