Have you ever wondered if it is possible to get rid of an IRS Tax Lien? Several options are available to deal with a Federal Tax Lien. Read more below.
IRS Tax Liens Can Be Disruptive.
Federal Tax liens are not only imposing because they tell the world you ran into trouble with the IRS. Not only will an IRS tax lien lead to the eventual barrage of letters and faux “notices” from Tax Resolution “Experts,” but tax liens also hurt your credit, tax liens hurt your reputation, and tax liens make it hard to sell certain property that the lien is filed against.
The truth is that – as soon as a liability is finally assessed – the IRS has a “secret lien” on all of a taxpayer’s assets. This simply means that in certain circumstances, even without an actual public filing, the IRS will have a secured, priority, interest in the tangible property and real property of a taxpayer. (But that’s a boring legal discussion we won’t get in to here.)
When people discuss “getting rid of a tax lien” they are generally talking about getting rid of the public notice of their tax problems, or at least mitigating the damage called by that public notice.
There are several different options for dealing with a federal tax lien, and best strategy depends on each taxpayer’s particular situation and desired outcome.
Obtaining a Release of Federal Tax Lien
Obtaining a release of a federal tax lien is one way to “get rid of” an IRS lien but that might not be the best result. Why is that? When a tax lien is “released” the record of the original tax lien will stay on a taxpayer’s credit report for several years. Simply obtaining a lien release will not fully mitigate the damage to your credit, because the evidence that the lien existed will still be out there.
Despite its short-comings, a lien release is often the only option available when dealing with an IRS lien. Payment in full of a liability or an accepted Offer in Compromise will result in the release of a tax lien. Tax liens are also generally “self-releasing” after the Statute of Limitations of Collection has expired. The IRS will also consider releasing a tax lien if you or your representative can show that the release will actually increase your ability to pay the IRS. However – don’t expect the IRS to release a lien on a mere promise to pay, the IRS will need more than your assurances to issue a lien release when the tax liability has not been paid in full and the debt is still enforceable.
“Erasing” a IRS Lien via a Lien Withdrawal.
As part of the IRS’s recent (but no longer new) Fresh Start Program, tax lien withdrawals are now more common than they were previously. Although the IRS does provide some forms and guidance on irs.gov, the process can trip up the uninitiated. (For one, it might require several conversations with IRS employees and unbearably long hold times.) The major benefit to a Tax Lien Withdrawal by the IRS is that – as far as credit reporting agencies are concerned – it is as if the lien never existed. If you want that IRS lien off your credit, that might be possible. If you think that you can pay your liability quickly, or even if you need some time to pay your tax liability off, you should speak with a tax professional about the possibility of a lien withdrawal before you attempt to settle up with the IRS on your own. Simply paying you tax bill will result in a lien release and as discussed above – the tax lien filing may stay on your credit history.
If you are having financial troubles caused by a notice of federal tax lien filing, you should speak with a tax professional. Consider speaking with a real tax attorney. Feel free to schedule a 20-minute phone call with our tax attorney or call us at 203-740-1400 for more information.