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How to Remove an IRS Tax Lien From Public Records

If you fail to pay your tax debt in full, the IRS may file a federal tax lien. The lien is a legal claim against your property. This may include not only your home, but also personal property, vehicles, and financial assets. A lien can also attach to future assets acquired during the duration of the lien. Although tax liens no longer appear on your credit report, they can still affect your ability to access credit or get certain jobs. That’s because tax liens are a matter of public record. The good news is that there are ways to remove an IRS tax lien from public records.

How Do I Know If I Have an IRS Tax Lien?

The IRS will send several notices informing you of your unpaid tax debt. If you fail to pay your back taxes, the IRS will eventually file a Notice of Federal Tax Lien. This is filed with the secretary of state, county clerk, or state recorder’s office.

You can look up any IRS tax liens against you through one of the following methods:

  • Call the Centralized Lien Operation (IRS) at 800-913-6050 to verify a lien.
  • Conduct an online search through your state’s recorder’s office.
  • Search for an IRS tax lien on your secretary of state’s website.
  • Seek help from a tax professional who can search public records and access your tax records (requires power of attorney).

Tax Lien Withdrawal & Tax Lien Release

There are two main options for removing an IRS tax lien: withdrawal and release. Although the consequences of both are fairly similar, a tax lien withdrawal is the better option because it’s as if the lien never existed. Generally, you will need to pay your tax balance in full once you receive the lien notice. Upon payment, the IRS will then withdraw its intent to file a lien. There are, however, other ways to request a tax lien withdrawal.

Request a Tax Lien Withdrawal

The IRS may consider a tax lien withdrawal if any of the following conditions are met:

  • The Notice of Federal Tax Lien was filed prematurely or not according to IRS procedures.
  • You entered into an installment agreement to satisfy your tax debt and the agreement did not require a tax lien notice to be filed.
  • A withdrawal will facilitate collection of the tax debt.
  • You believe that withdrawal is in the best interest of yourself and the government.

Additionally, you may be eligible for withdrawal after the lien is in place if you meet all of the following conditions:

  • Your tax debt is $25,000 or less;
  • You entered into a Direct Debit Installment Agreement (DDIA) and will pay your balance within 60 months or before the statute of limitations expires, whichever is earlier;
  • You made three (3) consecutive direct debit payments (full amount);
  • All required tax returns have been filed and no payments are due; and
  • You haven’t defaulted on any previous or current DDIAs.

Request a Tax Lien Release

If an IRS tax lien has already been issued, you can request a tax lien release. This is generally done after you have paid your tax debt in full. In some cases, however, you may be able to obtain a tax lien release or partial release before your debt is paid off. For example, a partial tax lien release may be granted so you can sell your property to help pay down your tax balance. These types of requests are considered on a case-by-case basis. If you plan to seek a release prior to paying off your tax debt, we strongly encourage you to seek help from a tax professional. They can assist with the required documentation and ensure that everything is filed correctly.

How to Remove an IRS Tax Lien From Public Records

It’s important to note that a tax lien release doesn’t necessarily remove an IRS tax lien from public records. To ensure the tax lien is removed, you’ll need to complete IRS Form 12277, Application for Withdrawal of form Filed Form 668(Y), Notice of Federal Tax Lien.

You may request a withdrawal if your tax debt is satisfied, your lien was released, and:

  • You’ve filed all required tax returns for the past three years; and
  • You are current on your estimated tax payments and federal tax deposits, if applicable.

Within 45 days, the IRS should contact the courthouse where the lien was filed and ask them to withdraw it (if approved). You will also receive a copy of the notification. Be sure to submit a copy of the tax lien withdrawal to your financial institutions and creditors. You should also verify that the withdrawal was filed with the courthouse, as well. Although the IRS should do this on your behalf, it’s always best to follow up.

Steps For Preventing a Tax Lien

If you’re facing a large tax bill and worried about IRS collection actions, there are a few ways to prevent a tax lien from being filed against you. The most obvious option is to pay your taxes in full before the notice is filed. Other options include:

  • Request a Payment Plan. If you owe less than $50,000 (individual taxpayer), you can arrange to pay your tax debt over several months or years. Businesses with $25,000 or less in debt are also eligible.
  • Submit an Offer in Compromise. It may be possible to negotiate with the IRS and pay less than you currently owe.
  • Appeal The Tax Lien. If you disagree with the tax lien, you can appeal the decision.
  • File Bankruptcy. Depending on the type of bankruptcy and when it’s filed, you may be able to prevent the IRS from placing a lien on your property.

If you need help preventing or removing a lien, contact MoneySolver. Our tax specialists can help determine which course of action is best for you and help you stay out of trouble with the IRS. For a free consultation, call 855-476-6920 today!