How do I get a Tax Lien Release?

Autumn Rivers
Autumn Rivers
In the US, a federal tax lien is a claim on property by the IRS.
In the US, a federal tax lien is a claim on property by the IRS.

If you owe back taxes, the IRS will likely place a tax lien on your property, which means that you cannot sell it without the federal government getting the money you owe them. There are a few ways to get a tax lien release, though most of them involve paying at least some money to the IRS. For example, you can pay off the total, create a payment plan, or make an offer in compromise, in which you pay off a reduced amount. You can also appeal the amount if you do not believe that you owe the money, and if you win the resultant hearing, you can get the tax lien release. Finally, you do have the option of doing nothing, waiting until the statute of limitations runs out so that you do not have to pay, but of course there are usually consequences of seeking a tax lien release this way.

The most straightforward way of getting a certificate of release is to pay off the entire amount upfront, which may require that you get a loan or line of credit, or use the money from selling assets. Understandably, not everyone has the option of paying in full, which is why you may instead attempt to make a payment plan with the IRS. The lien is not usually removed until the entire amount, including fees and interest, is paid off, but you will at least be working toward an eventual tax lien release. You can also make an offer in compromise, which would result in you paying a reduced amount upfront. For this method to be successful, you must prove that the reduced amount is more than the IRS would get from you normally, perhaps because there is some doubt as to whether the amount is correct or fair for you to pay.

An offer in compromise requires that you show doubt as to liability, doubt as to collectibility, or that paying the debt would create an economic hardship for you. In general, your ability to prove any of these points would hint to the IRS that it would be easier to accept your reduced payment than fight you to get the full amount. If your offer in compromise is rejected and you think you have a case, you can file an appeal within 30 days of the written notice of lien. If you win in court, you will get a tax lien release, though it will still show up on your credit report. You will likely need a tax lawyer to have the highest chance of success when you take this route.

If you do not have the money to pay any portion of your back taxes, you may consider taking no action. The statute of limitations on back taxes is usually about ten years after the date of assessment, so if you are near that mark, waiting it out is a viable option. On the other hand, the IRS is allowed to put a tax levy on you, taking any money in your checking, savings, pension, social security, or insurance accounts. Basically, if you have any assets that you do not want to lose, this route is not usually advisable. If you have no money and nothing to lose, however, this may be your only option.

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    • In the US, a federal tax lien is a claim on property by the IRS.
      In the US, a federal tax lien is a claim on property by the IRS.