IRS files about 500,000 federal tax liens each and every year and that  coupled with the fact that hundreds of thousands have been filed in past years, if I were to guess I would say there are at least between 5,000,000  to 7,500,000 1/2 million federal tax liens currently on the books and records at different course houses in the United States.

These federal tax liens destroy a taxpayer’s credit. Anytime taxpayers want to buy or sell a house they creep up. So the federal tax lien must be dealt with.

Their different examinations to removing the federal tax lien and if you want some immediate answers feel free to call us for a free tax consultation.

How to Get Rid of a Lien

Paying your tax debt.

Pay it in full is the best way to get rid of a federal tax lien.

The IRS releases your lien within 30 days after you have paid your tax debt.

When conditions are in the best interest of both the government and the taxpayer, other examinations for reducing the impact of a lien exist.

Discharge of property

A “discharge” removers the lien from specific property.

There are several Internal Revenue Code (IRC) provisions that determine eligibility.

For more information, refer to Publication 783, Instructions on How to Apply for Certificate of Discharge From Federal Tax Lien (PDF) and the video Selling or Refinancing when there is an IRS Lien.

Subordination

“Subordination” does not remover the lien, but allows other creditors to mover ahead of the IRS, which may make it easier to get a loan or mortgage.

To determine eligibility, refer to Publication 784, Instructions on How to Apply for a Certificate of Subordination of Federal Tax Lien (PDF) and the video Selling or Refinancing when there is an IRS Lien.

Withdrawal

A “withdrawal” removers the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property; however, you are still liable for the amount due.

For eligibility, refer to Form 12277, Application for the Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien (Internal Revenue Code Section 6323(j)) (PDF) and the video Lien Notice Withdrawal.

Two additional Withdrawal examinations resulted from the Commissioner’s 2011 Fresh Start initiative.

One option may allow withdrawal of your Notice of Federal Tax Lien after the lien’s release.

General eligibility includes:

Your tax liability has been satisfied and your lien has been released; and also:

• You are in compliance for the past three years in filing – all individual returns, business returns, and information returns;

• You are current on your estimated tax payments and federal tax deposits, as applicable.
The other option may allow withdrawal of your Notice of Federal Tax Lien if you have entered in or converted your regular installment agreement to a Direct Debit installment agreement. General eligibility includes:

• You are a qualifying taxpayer (i.e. individuals, businesses with income tax liability only, and out of business entities with any type of tax debt)

• You owe $25,000 or less (If you owe more that $25,000, you may pay down the balance to $25,000 prior to requesting withdrawal of the Notice of Federal Tax Lien)

• Your Direct Debit installment Agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is earlier

• You are in full compliance with other filing and payment requirements

• You have made three consecutive direct debit payments

• You can’t have defaulted on your current, or any previous, Direct Debit installment agreement.

How a Federal Tax Lien Affects You

• Assets — A lien attaches to all of your assets (such as property, securities, vehicles) and to future assets acquired during the duration of the lien.

• Credit — Once the IRS files a Notice of Federal Tax Lien, it may limit your ability to get credit.
• Business — The lien attaches to all business property and to all rights to business property, including accounts receivable.

• Bankruptcy — If you file for bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien may continue after the bankruptcy.

help Resources For You

Centralized Lien Operation  — To resolve basic and routine lien issues: verify a lien, request lien payoff amount, or release a lien, call (800) 913-6050 or fax (855) 390-3528.

Collection Advisory Group — For all complex lien issues, including discharge, subordination, subrogation or withdrawal; find contact information for your local advisory office in Publication 4235, Collection Advisory Group Addresses (PDF).

Office of Appeals — Under certain circumstances you may be able to appeal the filing of a

Notice of Federal Tax Lien. For more information, see Publication 1660, Collection Appeal Rights (PDF).

Taxpayer Advocate Service — For assistance and guidance from an independent organization within IRS, call (877) 777-4778.

Centralized Insolvency Operation — If you are questioning whether your bankruptcy has changed your tax debt, call (800) 973-0424.