When you don't pay your taxes, the IRS tin file a tax lien, which is a legal claim to your belongings. This is different from a levy, which would mean the IRS is actually seizing the holding. A revenue enhancement lien shows other creditors that their involvement in your belongings comes first. What does this mean for your credit? Zero good. Besides potentially affecting your credit score, tax liens on your credit report tin get in harder for you to buy a firm or get a business loan. These instructions explain how to get rid of a tax lien by working with the IRS. We also explain how to remove a tax lien from your credit report, if y'all all the same accept tax liens that announced.

Important Tax Lien Credit Report Updates

Starting in 2017, the guidelines that credit bureaus follow for listing tax liens on credit reports inverse. The new rules hateful that supplementary data is now required before they will publish liens on consumer credit reports. The bureaus considered a lien'south information complete when it had a birth engagement or Social Security number, a proper noun, and an address. A revenue enhancement lien must have at least three of these 4 data points or the lien will not show up on your credit report at all. Understanding these new rules may help you become rid of the tax liens still present on your written report even after these rule changes.

Footstep one: Pay off your tax debt

Pay off your tax debt in 1 lump sum or in smaller installments.

This is the most straight manner to get rid of a federal tax lien.  Even if the Discover of Federal Tax Lien is not impacting your credit, information technology will touch your ability to sell or obtain property. Whatever time a debt exists to the IRS, in that location is a statutory lien in place making the IRS a priority creditor. There are a ton of options to get into an IRS program that will resolve the taxation lien.

TIP:

Debt.com can connect y'all to a taxation debt professional who can guide you through the procedure of paying off your tax debt.

Estimated Time (Lump-sum Payment): 30 minutes – 1 hr

Estimated Time (installment agreement): Varies by program but generally up to six years.

Footstep ii: See if y'all are eligible for withdrawal

Bank check the guidelines for applying to have a tax lien withdrawn.

You tin apply if y'all meet the following requirements:

  • The IRS released your lien and you paid off all of your revenue enhancement debt.
  • Withdraw of the tax lien volition facilitate collections of the tax liability.
  • Withdraw is in the best involvement of both the taxpayer and the government.

Other guidelines were created under the IRS Fresh Showtime initiative, which made it easier for taxpayers to repay loans.

Fresh Starting time also fabricated it possible for taxpayers to take their lien withdrawn if they agreed to a Direct Debit installment agreement. A Direct Debit installment agreement takes monthly payments toward your tax debt direct from your checking business relationship. Revenue enhancement lien withdrawal requirements for those in a Direct Debit installment agreement are as follows:

  • The rest of your tax debt must be $25,000 or less.
  • You must pay all of your tax debt either earlier the expiration of the drove statute or within 60 months, whichever comes sooner.
  • All of your other files must be in compliance.
  • You've paid three Direct Debit payments in a row.
  • Yous take no history of defaulting on any Direct Debit installment agreements.

When you meet these requirements, yous can begin the lien withdrawal procedure.

TIP:

Double- and triple-bank check these criteria against your personal finances to increment your chance of having your withdrawal accepted on the commencement attempt.

Estimated Prep Time: i-2 hours

Footstep iii: File for withdrawal

Send your application for lien withdrawal to the IRS.

Start past filling out IRS Form 12277. It'southward a simple, one-page class. This is basically a request to contrary IRS Form 668(Y), which is the Observe of Federal Tax Lien you received when the IRS created the lien. If everything goes as planned, you should receive IRS Form 10916(c) in the mail. This grade is a statement of tax lien withdrawal, meaning that the lien can officially be removed from your credit report.

TIP:

Brand copies of the completed course or take notes during the phone telephone call to keep for hereafter reference.

Estimated Course Time: 15-30 minutes

Estimated Response Time:  30-60 days

Footstep 4: Contact the credit bureaus

Ship a alphabetic character to the 3 credit bureaus alerting them to the withdrawal of your revenue enhancement lien.

The iii credit bureaus are Equifax, TransUnion, and Experian. To finalize the withdrawal of your tax lien from your credit study, send a letter of the alphabet to all 3 of the bureaus disputing its inclusion in your report.

TIP:

Include a copy of your credit report and the IRS Form 10916(c) that you lot received in the mail.

Total Time: From thirty days upward to 4 months

Article concluding modified on June twenty, 2022. Published past Debt.com, LLC

Reviewed By

Jacob Dayan