If you owe money to the IRS, the agency can eventually levy a federal tax lien on your home or personal property. When you try to sell the asset, the IRS will collect its money before you get your share. In many cases, though, you’ll have trouble making that sale as long as the lien exists on it, forcing you to try to get the lien removed beforehand. Getting a lien removed isn’t always easy, but it can be done, provided you have the money to clear things up.
Resolving Your Tax Issue
The first step toward having a federal tax lien removed is to pay the IRS what you owe. If you believe that the finding was in error, you can go through the appeals process, but this can take time. If you owe the debt, you may be able to work out a payment arrangement, but you’ll still have to pay off the entire amount before the lien is released. The good news is, you can possibly resolve this by filing Form 12277 to request withdrawal of the lien, which will allow you to have it pulled while you’re making payments on it.
Removing a Lien on Your Home
Once your debt is paid in full, the IRS should file a Certificate of Release of Federal Tax Lien with the authority that holds the lien. After a short time has passed, you should follow up with the appropriate authorities to make sure the lien is no longer on your property. If you’re selling your house, the title company will perform this search before the sale can go through, so it’s important to make sure it’s been cleared before putting your property on the market.
Clean Up Your Credit
Unfortunately, your property isn’t the only thing you have to worry about. A tax lien can damage your credit score. Paying it off doesn’t always clear that up, either. It’s important to pull a copy of your credit report at least 30 days after you’ve paid off your tax debt to make sure it’s been removed. If not, you should be able to contact the credit bureau in question and dispute the listing.
A tax lien can be a temporary setback, but as long as you know the steps to take, you can have it resolved. If you believe the lien is in error, it may help to work with a tax professional to discuss what options you have. You may be able to work with the IRS to resolve any misunderstanding that might have led to the lien.
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Stephen Wallick started Stephen Wallick & Associates to provide tax and accounting services to Contractors, Real Estate Investors, and Realtors. Steve specializes in IRS Tax Resolution services and works with his clients to resolve cases under scrutiny by the IRS. As a tax professional and enrolled agent, Steve can save you money with IRS loopholes each year. With over 20 years going up against “The Man”, Steve is uniquely qualified to resolve even the toughest IRS cases.