Three ways to Remove an IRS Tax Lien

If you're reading this you probably already know the devastating effects a Tax Lien can have on you. Your credit, your assets, your home- it's all at risk. So how do you go about removing a Tax Lien? I have to be honest, the only sure way to remove it is to pay your tax debt in full. But until then, one of these options may work for you.

Appeal the Lien Filing

The IRS has five business days after filing the lien to provide you with written notice. The written notice must include notice of the right to request a hearing within 30 days from the sixth day after the Lien filing. If you win the appeal, the lien will be withdrawn. However, the lien being filed on you will still appear on your credit report. Because of that, this method would not be ideal for those out to protect their credit.

Request Partial Discharge

You may own several assets that are encumbered by the tax lien. You can use one to pay off the IRS. If you want to do this ask for a discharge from the Tax Lien. The IRS will likely do this. You will need to send a detailed letter to the IRS. There is no preprinted form for you to fill out. IRS Publication 784, “Application for Subordination of Federal Tax Lien” lists all the information you will need to include in your letter.

What to do if the IRS Files a Tax Lien in Error

The IRS occasionally files a tax lien notice when you don't owe anything. Perhaps you paid your bill late, and the IRS neglected to update your account. If this happens, under the Taxpayer's Bill of Rights you are entitled to a “Certificate of Release”. The “Certificate of Release” will state that the Lien was filed in error. It will then be your job to mail or deliver photocopies of the release to the three credit bureaus- Experian, TransUnion and Equifax. This will minimize the damage to your credit rating caused by the IRS error.

Avoid Bankruptcy
Contrary to popular belief, filing Bankruptcy will not wipe out a Tax Lien. If your Tax Debts qualify for a discharge under any type of bankruptcy, the Lien will remain. If you owned any property going into bankruptcy, the property is still subject to a Tax Lien. The IRS could seize the property after your bankruptcy is over.

Be careful when you perform any of the above tasks to get the IRS to release your Lien. You risk having your Lien remain until the statute of limitations expires if you make even a small mistake. You also greatly increase your chances of having the Lien removed if you file your back taxes.