How To Resolve A Tax Lien

If you are facing a Federal tax lien, ignoring the IRS’ correspondence won’t make it go away. Thus our first word of advice is to try and avoid having a tax lien filed against you if possible.  This can be done by responding to the correspondence, setting up a payment plan or a host of other options.  But if one has already been filed against you, this post will tell you how to deal with it.

How to Get Rid of a Federal Tax Lien
The easiest way to get a Federal tax lien lifted is to pay the tax owed, however, this is not always possible. If that is the case, you may qualify for one of the following three options:

A “withdrawal” removes the public Notice of Federal Tax Lien (NFTL) from your credit report and assures that the IRS is not competing with other creditors for your property; however, the taxpayer is still liable for the amount due.  Generally, the conditions to have a tax lien withdrawn are as follows:

  • Filing of the NFTL was premature or otherwise not in accordance with the IRS’s administrative procedures.
  • The taxpayer has entered into an installment agreement to satisfy the liability for which the lien was imposed.
  • Withdrawal will facilitate the collection of the tax liability.
  • With the consent of the taxpayer or the National Taxpayer Advocate, the withdrawal of the NFTL would be in the best interests of the taxpayer and the United States.

For more information, refer to IRS Form 12277 (Application for the Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien).

A “release” is when the IRS or State tax agency formally acknowledges that a tax lien has be