Remove a Tax Lien from Your Credit Report

There is a way to make tax liens disappear from your credit reports completely, and quickly. Unfortunately, not all taxpayers who are dealing with this problem know about it.

In 2011 and 2012, the IRS implemented something called the “Fresh Start” initiative, which is a series of procedures and policy changes directed toward taxpayers facing collection from the IRS. One of the changes includes a policy that allows certain taxpayers to request that their tax liens be withdrawn, even before the underlying tax debt has been paid. Under this policy, a taxpayer can request the tax lien be withdrawn in certain circumstances.

Determine if You Qualify

  • Your tax liability has been satisfied (you’ve paid what you owe) and your lien has been released;
  • You are in compliance for the past three years in filing your individual and business returns, and;
  • You are current on your estimated tax payments and federal tax deposits, as applicable.

Apply to Have The Lien Withdrawn

If you believe you qualify, fill out IRS Form 12277, Application for Withdrawal. It’s a fairly simple one-page form, with one page of instructions. Complete it and send it to the IRS per their instructions. If the IRS approves your request, it says it “will file Form 10916(c), Withdrawal of Filed Notice of Federal Tax Lien, in the recording office where the original NFTL was filed and provide you a copy of the document for your records.”

This means you will have a written record that the lien has been withdrawn. You can ask the IRS to then notify the credit reporting agencies of the withdrawal, or you can supply that notice to them yourself.

Once the credit reporting agencies process your request, the lien will be withdrawn and your credit report and scores will treat it as if it never existed. Note that this is not a process you need to pay a credit repair firm to do on your behalf; it’s something you can handle on your own.

http://www.irs.gov/pub/irs-pdf/f12277.pdf