IRS Lien Withdrawal and Lien Policy Updates—June 2011

Taxpayers Can Now Request the IRS to Withdraw a Tax Lien

In June 2011, the IRS followed up on their February announcement of what the agency calls “Fresh Start changes.” The Fresh Start initiative will reportedly reduce the total number of tax liens filed and give taxpayers the ability to remove an IRS lien under certain conditions. The possibility of having a lien removed in a timely fashion is a significant improvement over previous policy, which provided no sure way for a taxpayer to remove the lien from credit reports for a full seven years after the debt was paid and the lien released. The IRS has responded to critics and given taxpayers a chance at rebuilding financially while they are paying off their tax debt.

The initial IRS announcement on February 24, 2011 about the Fresh Start initiative included the claim that taxpayers would now be able to release a lien and have it removed from their credit if they were consistently making direct debit payments against a tax debt of $25,000 or less. The announcement sent ripples through the tax representation industry among small practitioners and large IRS representation firms alike. A policy change of this magnitude changes the way tax representatives approach tax debt solutions. The problem with the February announcement is that the IRS failed to include instructions or guidance about how to take advantage of the Fresh Start initiative.

Congress, TIGTA, the National Taxpayer Advocate, and others have repeatedly told the IRS that it needed to reexamine the way it uses levies, often ineffectively, to attempt to collect tax debt. Even in cases where delinquent taxpayers paid their tax debt in full, the IRS provided for a way to release the lien (meaning it is noted as released in your public records), but not removed entirely (in which case the lien remains on your credit report for a period of seven years). Critics have argued that this unfairly punishes taxpayers, even after they are committed to repaying their debt and remaining compliant with filings. The Fresh Start initiative appears to be a direct response to those criticisms.

Set up an IRS Payment Plan and Get Your IRS Lien Withdrawn in Three Months!

The Direct Debit Installment Agreement Lien Withdrawal is the most significant change to IRS lien policy in years. It allows taxpayers who still owe a tax debt to have their tax lien wiped from their credit report.

CALL NOW (800-581-0456) to find out how quickly we can help you regain compliance and start a payment plan with the IRS so you can get that tax lien removed from your credit report! The IRS is offering you a way to improve your credit. Don’t turn them down.

If you qualify and meet the IRS eligibility requirements (see below), the IRS will withdraw your lien after you enter into a Direct Debit Installment Agreement and complete the first three installments. That means you could request an IRS lien withdrawal in as few as 90 days after you set up an IRS payment plan!

To withdraw the lien, you must be in compliance with the IRS (file delinquent tax returns), meet all qualifications and eligibility requirements, and formally request the IRS lien withdrawal in writing.

Do You Qualify?

To qualify for Direct Debit Installment Agreement Lien Withdrawal, you must be an individual, a business with income tax liability only, or an entity that has gone out of business but still carries a tax debt.

Are You Eligible?

The Direct Debit Installment Agreement Lien Withdrawal eligibility requirements will cover most American taxpayers. To be eligible, your tax debt has to be less than $25,000. If you owe more than $25,000, you can pay down the balance to $25,000 before you request an IRS lien withdrawal. The Direct Debit Installment Agreement you set up with the IRS must pay the amount you owe in full within 60 months or before the collections statute expires, whichever comes first. You must be in full compliance with tax filings and with any current taxes you owe (like quarterly payments or employment tax payments). You must have made at least three consecutive direct debit monthly payments. You cannot have received an IRS lien withdrawal previously for the same taxes. You are ineligible if you have defaulted on any current or previous Direct Debit Installment Agreement.

Get Help Now

The Direct Debit Installment Agreement Lien Withdrawal is the most significant change to IRS lien policy in years. It allows taxpayers who still owe a tax debt to have their tax lien wiped from their credit report. You must meet all IRS qualifications and eligibility requirements to take advantage of this policy change. If you need help or want more information, call us now at 800-581-0456.

You Can Now Get a Released Lien Withdrawn!

If the IRS placed a lien on your property and you have since paid your tax bill, you can now get your lien withdrawn! Before now, your only option was to have the lien released and then wait for it to fall off your credit report seven years later. The catch? You have to ask the IRS to withdraw your lien. Go to the IRS Form 12277 and follow the instructions.

TAX TIP: In item 8, “Reason for requesting withdrawal,” check box d, the “best interest” provision.

IRS Increased the Lien Filing Threshold

The IRS has decided to increase the lien filing threshold from $5,000 to $10,000. In most cases, the IRS will file a lien only if your tax debt grows to $10,000 or more. The implication is that the IRS will be filing fewer liens overall. Most taxpayers we speak to who have tax liens typically owe $25,000 or more. We do not expect this change to impact most TaxMasters clients.

Call us now if you need help. Get started today. 800-581-0456. We solve tax problems.