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By Michael S. Anderson of Anderson Tax Law logo for Arizona tax attorney Michael S. Anderson P.C.
  • An IRS Lien release won’t remove the Tax Lien from your Credit Report…you must ask the IRS to Withdraw it

    Antique_Mailbox-thumb-375x341-49286IRS Lien?

    The IRS issues Notices of Federal Tax Lien (NFTL) with great regularity.  It’s own rules allow it to issue the NFTL if you owe more than $10,000.00.  There are a tremendous number of Americans who owe the IRS more than $10,000.00 and there are lots of NFTLs as a result.

    I write and talk about the NFTL often, but there is a big issue that I think that many with people with tax lien problems miss and that is this:

    If you have paid off a tax debt, discharged it in bankruptcy, settled it via an IRS Offer in Compromise, or if the IRS Statute of Limitations has wiped it out…the tax lien will be released.

    When it’s released, it doesn’t exist for purposes of tying up a property etc.

    But, the credit report will still show that the lien existed for several years, and will continue to damage your credit until the Fair Credit Reporting Act mandates it’s removal.

    That’s not a happy thing.

    The good news is that you can ask the IRS to “withdraw” the NFTL after the lien has been released and the withdrawal should remove the record from the Credit Report.

    You can request the withdrawal in writing by using IRS Form 12277, Application for Withdrawal”.

    In item 11, make sure and check the box that you believe that withdrawal is in the best interest of the taxpayer and the government.

    You are basically making the argument that a person with a clean credit history has a higher chance of avoiding future tax problems than one with a bad credit history.  (Arguably untrue as well I suppose)

    The general eligibility requirements to have the NFTL withdrawn are:

    1.              It has been satisfied and released

    2.              You have filed the last three years returns including all business and information return and:

    3.              You are current on all estimated tax payments and tax deposits