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How To Remove a Tax Lien

tax lien removal

It's no wonder that tax relief specialists thrive in such great numbers - taxes are seriously complicated and repercussions of failing to pay taxes are significant. Once you get stuck with a tax lien, you feel trapped. So what can you do to remove a tax lien?

A tax lien is a legal way for the IRS to get an individual to pay tax debt that is owed to them. A tax lien can be placed on either your personal or real property when you fail to pay taxes within a given period of time. For example, an IRS tax lien can attach to your possessions (house, car, boat) and to any property or items that you may acquire even after the IRS files a lien. The lien is usually filed at a local County Clerk’s office and is a public document. It can also be filed with the Secretary of State.

The IRS gains legal claim on property until the lienor can pay the tax that is owed, the idea being to encourage the lienor to pay the tax. If the IRS has placed a tax lien on you, it will seriously affect your credit rating and will either render sale of personal property difficult or impossible. Removing a tax lien should be a huge priority for you, as you're no doubt well aware.

What are the options?

First, time is of the essence. You have 30 days to respond to a tax lien after receiving a “Final Notice of Intent to Levy” so respond swiftly.

  • Wait it out and let the tax lien expire. For several reasons, this is not the best option. There is a set time period in which a tax lien can be acted upon. For tax liens more recent than November 6, 1990, the tax lien becomes unenforceable after 10 years. For all liens prior to November 6, 1990, the tax lien becomes unenforceable after six years. If you have had a tax lien for a considerable amount of time and the IRS hasn't seen fit to act upon it, perhaps just waiting for the period to expire is an option you

    wish to consider. If the period expires with no extension, then the possibility of an action on the tax lien has been removed. This option certainly requires the least amount of effort, but you will have to live with the possibility that the tax lien will be extended before it expires. In addition, the tax lien can show on your credit report forever if you don't pay anything to remove it.

Why might the IRS decide to let the period expire without hounding you any further or acting upon the tax lien? You might not realize it but it costs the IRS money every extra step of the way when they are trying to get hold of taxes that are owed. The IRS has made a science of figuring out whether this extra effort is worth the money and if they can ultimately expect to collect. Hence, the hesitation - the IRS may determine that it's not in their best interest to proceed in collecting on a tax lien. While this is good for you, it does nothing to remove the tax lien from your credit report. It remainsl in effect, whether the IRS acts upon it or not.
  • Pay the tax that is due. If you choose this option, your tax lien should be removed within 30 days. It can be removed from your credit report as well. Upon removal of the tax lien, you may receive proof that the lien has been removed in the form of a certificate copy. Ask for a copy of this documentation if it is not sent automatically.
  • Proving financial hardship. Consider proving financial hardship. This means you will need to prove to the IRS that levying money in your bank account will cause more harm than good and that it may cause you to never be able to pay them what you owe them. You must realize that the IRS wants to get the tax money you owe, so if you declare that you are, in their terms, “Currently Not Collectible”, you can buy some time and consult with a tax professional to help you create a realistic tax payback plan.

    Category: Taxes

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