Options to Release a Federal Tax Lien

If you owe back federal taxes and are unable to pay them, the IRS may encumber certain types of personal or real property with federal tax liens. When the IRS places a lien on your property, you will not be able to sell the property without first satisfying the lien. Furthermore, an IRS lien can seriously affect your credit standing and credit score. You are even at risk of losing your property altogether. Therefore, you should work to remove the tax lien, even though this can be difficult.

Wait Them Out

One way to do away with a tax lien is simply to wait until it expires. Although tax liens expire within 10 years, the tax lien becomes unenforceable after 6 years. Therefore, if you have had a tax lien a considerable amount of time and the IRS has neglected to act upon it, simply waiting until the tax lien expires may be an option. Be aware, however, that the IRS is known to act quickly and efficiently when it realizes that a tax lien enforcement period is about to expire.

Pay Your Taxes

The easiest way to do away with a tax lien is simply to pay the taxes due. If you pay the taxes, along with any penalties and interest charges, the IRS will remove the tax lien within 30 days. Once the lien is released, you can also have it removed from your credit report by simply providing the credit bureaus with evidence that the lien was paid in full. Typically, the supporting documentation will be in the form of a certificate of tax lien release.

Offer in Compromise

Another way that the IRS may consider removing the tax lien is when you make an offer in compromise. Essentially, this is an offer to settle the tax for an amount less than the original IRS claim. The IRS is often agreeable to accepting an amount less than is owed, to avoid further collection costs and to resolve the matter quickly. Therefore, if your offer is well calculated, you may be able to remove your tax lien by paying an amount much less than that due. If your offer is accepted, the IRS will remove the lien, and you can also have the lien removed from your credit report by writing to the major credit bureaus.

Refinance Your Home

If you have sufficient equity in your home, there is a small possibility that you will be able to find a home loan lender willing to extend you a second mortgage on your home, allowing you to use the money from that loan to pay off the tax bill. If you take this route, be careful to choose the right loan product and look out for high rates and fees.

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