Remove a Tax Lien from Your Credit Report

An IRS tax lien does not need to ruin your credit score forever.  It is possible to have it removed so that you can qualify for a business loan or to allow you to qualify for financing for that new house you have been wanting to purchase.

If a tax liability is not paid, the IRS will send a notice of the amount due and a demand that it be paid.  If it is not paid, a tax lien is automatically created by law.  To ensure that its liens have priority over other creditors, the IRS may file a Notice of Federal Tax Lien with the county Recorder’s Office in the county in which the property is located.

The IRS will usually file a Notice of Federal Tax Lien if it is owed more than $10,000.  However, if a taxpayer agrees to pay the tax due with a payment plan, the IRS may agree not to file if the amount owed is less than $25,000.  If the amount owed is over $25,000 but less than $50,000, the IRS may agree to not file a lien if the taxpayer enters into a payment plan that specifies that the payments will be automatically deducted from the taxpayer’s bank account.

The IRS is required to release a federal tax lien once the taxes are paid.  The IRS must also release its lien if it agrees to accept a reduced amount in satisfaction of the tax liability (such as with an offer-in-compromise) and this amount is paid by the taxpayer.  A taxpayer can request a Certificate of Release if the IRS does not release its lien within 30 days after payment of the taxes.  When the IRS issues the release, it will also notify the county Recorder’s Office that the lien should be released.  It is a good idea to follow up after a couple of months with the county Recorder’s Office to ensure that its records show that the lien has been released.

A taxpayer can use the IRS Certificate of Release to clear up their credit report by submitting it to the credit agencies.  When contacting the credit card reporting companies, it is important to send a letter with a copy of the Certificate of Release as well as a copy of the credit report with the disputed item circled.

If you have tax liens that are affecting your credit, our Firm may be able to help.  Call us today for more information.

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