Having a lien on your credit report can greatly impact your finances. It will be more difficult to get future credit from creditors. There are different types of liens that can affect a credit report such as mechanical liens and IRS tax liens. You cannot get tax liens erased from your credit report until seven years after you have fully paid the taxes.
If the taxes are still outstanding, hire a reputable tax attorney to assist you with dealing with the IRS. The tax attorney will help you to show any financial inability to pay the tax lien and offer the IRS a compromise to pay an amount that is reasonable. The attorney will be able to negotiate on your behalf.
After paying the tax lien, be sure to get a Certificate of Federal Tax Lien Release. The IRS will issue you a certificate of release as long as the taxes are paid or there is no longer any legal requirement necessary to collect those taxes. Liens are usually removed within a 30-day time period. Your tax attorney will be able to figure out what these legal requirements and procedures are and inform you.
In order to have the record of a lien released, a taxpayer must obtain a Release of the Notice of Federal Tax Lien. Generally, the IRS will not issue a notice of release of lien until the tax has either been paid in full or the IRS no longer has a legal interest in collecting the tax. The IRS has standardized procedures for lien releases, discharges and subordination. In situations that qualify for the removal of a lien, the IRS will generally remove the lien within 30 days and the taxpayer may receive a copy of the Certificate of Release of Federal Tax Lien.
Order a current credit report from each credit bureau namely TransUnion, Experian and Equifax. Evaluate all three credit reports and note any tax liens listed on each. Check all public records to see if the tax lien has been released or not. If not, contact the credit reporting agency and have them contact the IRS directly to release the lien.
Write a letter to each credit bureau with a copy of proof that tax lien has been removed. Ask each credit bureau to update your credit report by removing the tax lien in question. Be sure that you do a follow up to ensure that the changes are reflected. Order a new credit report within 30 to 60 days, which should show the tax lien discharge.
If the offer of compromise is accepted by the IRS, go ahead and pay the amount in full. Be sure to write a letter or ask your tax attorney to do so and request the tax release certificate from the IRS. Don’t assume that the IRS will send it to you. At least you will have the request in writing, if you do not receive the certificate of release.
You first need to determine if you owe the taxes or not. Don’t assume that the IRS is right. Investigate the matter and ask for an explanation if you are unsure.
Things You'll Need
Certificate of tax lien release