How to Release A Tax Lien: Guide on Removal of a Federal Tax Lien
Once the IRS files a notice of federal tax lien the effects of the lien will remain intact until you get back into compliance with the IRS. In order to release a tax lien you will need to obtain a certificate of release of lean from the IRS. The IRS will need to ensure that your tax liability will be full filled in order to issue the release. It is rare that the IRS will release the lien without the liability being full filled but there are a couple ways you can get by without paying in full. There are a few main ways the IRS will release a tax lien, below are the details on each method. Once either of these conditions has been satisfied, the IRS will have 30 days to release the tax lien.
The taxes owed are paid in full
The IRS will release the lien once they have received all tax amounts owed, plus interest and penalties. Many times taxpayers cannot pay off the taxes in full so the IRS has payment plans available for taxpayers to pay off the taxes overtime. If you choose to pay off the taxes overtime, the lien will still remain in effect until the tax amounts have been paid off in full. The IRS will not reduce the tax lien when payments are made, the entire balance of the tax lien will show until the total amount of taxes is paid. One thing to note is that if you have not yet received a tax lien it can be avoided by entering into an installment agreement or some other form of IRS payment plan.
Taxes are settled through an offer in compromise
The offer in compromise program allows taxpayers to settle their taxes owed for less than the total amount. In order to qualify for this the taxpayer will be required to meet a strict set of requirements set forth by the IRS. The taxpayer must make an offer to the IRS for an amount that is equal to or greater than what the IRS would ever expect to collect from the taxpayer even if they used forced collection mechanisms. An offer in compromise is one of the the hardest settlement methods to qualify for and it has a very high denial rate. If you are considering an offer in compromise it is highly advised that you use an experienced tax professional to file for you. A tax professional will also assess your situation and determine if you are a likely candidate to receive this type of relief before applying.
Statute of limitations expires and lien is not enforceable
Like most other debts, IRS debts have a statute of limitations. The typical period is 10 years from the date the IRS sends out your first assessment notice of taxes owed. Sometimes the statute of limitations can be extended if bankruptcy was involved and the tax was not discharged, an offer in compromise was filed, form 900 was sign allowing the IRS more time to collect or several other sly tactics the IRS has been known to use.
IRS accepts a bond that guarantees payment of tax debt
The IRS will remove the lien within 30 days of them accepting a bond that you submit to them. This bond will guarantee your payment of the taxes owed and is almost the same thing as paying the taxes owed in full. It may be difficult to qualify for a bond because the requirements pretty much require you to have enough money to pay the taxes owed in full in order to qualify.
Once the 30 days have passed since you have met any of the above requirements the IRS should release the lien. It is not uncommon for the IRS to not release the lein and a little bit of work on your part must be done to get things straightened out. One way you can go about is is by contacting the Centralized Lien Unit by calling the toll free telephone number, (800) 913-6050. You may have to show them some proof the tax was paid and IRS written acknowledgment of the payment. Also once you get the certificate of release you must record it if the IRS doesn't. You can also send a copy of the certificate of release to the three major credit bureaus to make sure it gets updated in your credit report that the lien was released.