How to Remove Paid Tax Liens From Credit Reports

The Internal Revenue Service automatically issues tax liens against taxpayers who owe $10,000 or more. A serious negative item on your credit report, a tax lien lowers your credit score in a way similar to bankruptcy and court judgments. Paid liens remain on your credit report for seven years after you resolve the tax liability unless you take steps to remove them. In 2011, the IRS made it easier for citizens to remove tax liens from credit reports after paying their bills.

Step 1

Pay your tax debt. The IRS automatically releases the lien within 30 days after you pay the tax debt in full. You should receive a Certificate of Release of Federal Tax Lien after you settle your tax liability.

Step 2

Gather the following documents: Notice of Federal Tax Lien, also known as an NFTL or Form 668(Y), receipt or proof of payment of your tax bill and your Certificate of Release. You will need this information when you contact the IRS.

Step 3

Check that you have filed your tax and information returns for the last three years and paid any estimated tax payments and federal tax deposits. You can apply to withdraw a paid tax lien only if you are up to date with your tax payments and filings.

Step 4

Visit the IRS website. Download and print IRS Form 12277, Application for Withdrawal and instructions.

Step 5

Fill in the form. Use the instructions to help you. Check the last box in section 11, which states that withdrawing the record of the lien is in the best interest of the taxpayer. In box 12, explaining that you paid the tax bill and that the IRS released the lien.

Step 6

Attach the NFTL, proof of payment of the tax bill and the IRS release of lien notice to form 12277. Send the form to the IRS per their instructions.

Step 7

Receive the IRS response. If the IRS approves your application, it will file a Withdrawal of Filed Notice of Federal Tax Lien notice in the recording office where the original tax lien was filed. The IRS will send you a copy of this document for your records.

Step 8

Write to the three credit reporting agencies -- Experian, Equifax and TransUnion -- and ask them to remove the tax lien from your report. Enclose a copy of the IRS withdrawal notice with each letter. Remember to keep the original notice for your records. Ask the credit bureau to notify you when they remove the tax lien from your report.

Step 9

Visit Annual Credit Report's website -- the site run by the three credit-reporting agencies -- and request a copy of your credit report. By law, you can request one free copy of your report once a year. Check that the tax lien has been removed. Your score also should rise, as if the tax lien never existed.


You can also ask the IRS to notify the credit bureaus and any other creditor of the withdrawal notice. Write to the IRS and provide the names and addresses of the institutions you want them to notify.

Even if you haven't paid what you owe, you can still ask the IRS to remove a tax lien from your credit report. To qualify, you must owe less than $25,000, enter into a direct-debit installment agreement that allows the IRS to take payments from your bank account and make a minimum of three payments. Other conditions apply.


Removing a tax lien should help your credit score. However, if the tax lien is very old or you have other negative information on your report, your score may not rise by much.

The IRS lien withdrawal policy does not apply to state tax liens.

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