How to Get a Federal Tax Lien Released

Posted 6/22/2009 1:57:19 PM

Having your name on a federal tax lien can be scary and intimidating, to say the least. Many taxpayers who receive lien notices feel cornered by the notice, and worry that they will never find a way out. However, an IRS tax lien is not a death certificate for your finances, and you have several options for getting it released.

Validate or Appeal
If the IRS has issued a lien against your property, then it is likely due to an IRS back tax liability. Essentially, there is no way to release the lien until the tax debt is resolved. There are a number of ways you can go about doing so, but before you even think about paying the debt, you will want to make absolutely sure that you owe the full amount they are citing you for. If the total amount is incorrect, or the lien was filed improperly, then you can appeal it. To appeal a federal tax lien, you can request a collection due process hearing with the office of appeals. If you lose your appeal, you still have 30 days to have your case reviewed for proper jurisdiction. However, if it turns out that the liability amount is correct, then you are going to need to resolve it to get the lien released.

Pay in Full
If you have the financial ability to pay off your IRS debt, without suffering in other financial aspects of your life, then it can be a great way to quickly and easily release your tax lien. However, determining the exact amount needed to fully pay off your tax debts can often be difficult.

Offer in Compromise
In some cases, the IRS will allow you to settle your debt through a reduced lump sum payment to the IRS. The program is known as an Offer in Compromise (OIC). In order to qualify for an OIC, you will need to prove to the IRS that you truly cannot afford to pay your all of your tax liability. However, unless you are trained on how this process works, you should hire a tax lawyer or a tax professional to negotiate with the IRS on your behalf. To learn more about Offers in Compromise check out our Services section.

Installment Agreement
If you cannot afford to make a one time payment to the IRS, then you can negotiate an Installment Agreement, which will allow you to pay back all or part of your tax liability to the IRS in monthly payments. Depending on how much you owe the IRS, you might qualify for a Streamlined Installment Agreement, which has an easier approval process. To find out more about this IRS program, check out our Installment Agreement page.

Unfortunately, the federal tax lien will not be released merely by entering into an Installment Agreement. Rather, the lien will remain in place until the tax debt is paid in full.

Bankruptcy
Bankruptcy should always be one of your last options to deal with a tax debt. Tax debts are not always discharged during bankruptcy, and having it discharged through bankruptcy will have a drastic negative impact on your credit. Before pursuing this option, you should always seek professional advice to assure filing for bankruptcy is, indeed the right, the best option for you.

Wait it Out
Some people may benefit from simply waiting out their lien. Since the collection statute of limitations expires after 10 years, you may be able to just wait for it to expire. However, this option can be dangerous, as the IRS will often find reasons to extend the statute of limitations on a tax liability. If you are seriously considering waiting for the statute of limitations to expire, then it is highly recommended that you speak to a professional who can assess your case.

Hire a Professional
If you need help settling your tax liabilities and are confused about the entire process of negotiating with the IRS, then you should seek help from a professional. Our tax lawyers have helped thousands of taxpayers with their IRS problems. To see if we can help you, check out our Contact Us page and request a free financial analysis.