Federal tax liens are a public record that informs your other creditors of your IRS tax debt. The lien can impact your ability to sell your home, refinance, or get a home equity loan.
There are several ways around a tax lien, including getting it released, withdrawn, discharged, or subordinated. Your best option will depend on your facts and circumstances.
Tax Lien Release
Tax liens are no longer shown on your credit report and don’t impact your credit scores. In 2018, the three major credit bureaus agreed to remove tax liens from all personal credit reports.
Before this change, tax liens could appear on your credit report even after you’d paid off your tax debt. A lien release occurred when the taxpayer’s debt was paid off or settled, but anyone who checked your credit could still see a reference to the tax lien.
You would have to seek a lien withdrawal after the lien had already been released to remove the tax lien from your credit report.
Tax Lien Withdrawal
Now, you don’t need to worry about lien releases because they are no longer shown on credit reports. However, it’s important to note that tax liens are still public records. A potential creditor—such as a mortgage lender—could still see the tax lien if they search these records.
A lien withdrawal removes the public Notice of Federal Tax Lien (NFTL) from the public records. However, it does not eliminate your responsibility for paying off your tax debt.
The IRS will sometimes withdraw a tax lien before you’ve paid off your debt in full. You must request the lien withdrawal for one of the following reasons:
- The NFTL was filed prematurely or not in accordance with IRS procedures.
- You’ve entered into certain types of IRS installment agreements.
- Withdrawal will facilitate tax collection.
- Withdrawal is in the best interests of the taxpayer and the government.
You can request a lien withdrawal if you enter into a Direct Debit Installment Agreement, pay off your balance to below $25,000, and meet certain other requirements.
If you don’t qualify for a lien withdrawal, you can also talk to a tax resolution attorney about a lien discharge or lien subordination.
Get help with IRS tax lien problems by calling The Gartzman Law Firm at (770) 939-7710. We can listen to your concerns and help you find the best tax resolution strategy for your case.