A federal Tax Lien is the federal government's legal claim against your property when you neglect or fail or fail to pay a tax debt. Unpaid tax liens can have a devastating affect upon your credit score. Even if you have paid the lien, it still shows up on your credit report and has a negative effect on your FICO score. It also affects your ability to obtain new credit. Unless the IRS files a lien notice, no one knows about the lien except you and the IRS.
This article will show you the steps to take to remove a paid tax lien from your credit report.
When you owe money to the IRS, they file a public document called a Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property. Every creditor with whom you apply for credit will see it on your credit report. Depending upon the amount, tax liens have about the same impact on your FICO score as a mortgage foreclosure. If you have paid the tax lien here are the steps to have it removed from your credit report.
In 2011 the IRS initiated a program called the Fresh Start Initiative. This program allows the tax payer to have the lien "Withdrawn" from public notice, meaning the IRS will remove the Notice of Federal Tax Lien document they filed internally and with the courts that you owe them money. It also allowed the tax payer to have the notice removed from their credit report. This does not, however, mean that the lien has been satisfied, or "released." The only way a tax lien can be released is if it is paid in full or the time to collect it has expired.
Documents you will need to file with the IRS:
You will need the information on form 668(y) in order to properly complete form 12277. On form 12277 you shouldn't have a problem completing lines 1-9 using the information from your form 668(y). On line 10, "Current Status of Tax Lien" make sure you check the box that indicates the lien has been released. On line 11, "Reason for Request Withdrawal of Federal Tax Lien" you must check the box that indicates Tax payer, or the Tax Payer Advocate acting on behalf of Taxpayer believes Withdrawal is in the best interest of the Taxpayer and the Government. On Line 12 you must give an explanation for the withdrawal request. In this section you must write, "As per the fresh-start program, I am requesting that this lien be withdrawn. Once reviewed and approved, please forward copies of the withdrawal notice to:"
Equifax Information Services, Inc.
P.O. Box 740214
Atlanta, GA 30374
Transunion Consumer Solutions
P.O. Box 2000
Chester, PA 19022-2000
Experian
P.O. Box 4500
Allen, TX 7501
Submitting your documents to the IRS
When you have completed form 12277 you will need to send it to the correct IRS office or their response could be delayed. You will find the information on your form 668(y). Form 668(y) will have the address of the IRS office that filed your Notice of Federal Tax Lien. This location varies depending upon the state you lived in when the tax lien was originally filed. If you do not have that information, get a copy of IRS Publication 4235. It has the contact information for the IRS Collection Advisory Group for the state where your lien was filed. If you call them they can tell you to which IRS office you should submit your documents.
Contact the credit bureaus
When you receive a response from the IRS (if it is positive) send that as an attachment with a letter to all three credit bureaus requesting the notation of the lien be removed.
When you owe money to the IRS, they file a public document called a Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property. Every creditor with whom you apply for credit will see it on your credit report. Depending upon the amount, tax liens have about the same impact on your FICO score as a mortgage foreclosure. If you have paid the tax lien here are the steps to have it removed from your credit report.
In 2011 the IRS initiated a program called the Fresh Start Initiative. This program allows the tax payer to have the lien "Withdrawn" from public notice, meaning the IRS will remove the Notice of Federal Tax Lien document they filed internally and with the courts that you owe them money. It also allowed the tax payer to have the notice removed from their credit report. This does not, however, mean that the lien has been satisfied, or "released." The only way a tax lien can be released is if it is paid in full or the time to collect it has expired.
Documents you will need to file with the IRS:
- IRS Form 12277 (Application for Withdrawal of Notice of Federal Tax Lien)
- IRS Form 668(y) Notice of Federal Tax Lien
- IRS Form 668(z) Certificate of Release of Federal Tax Lien
You will need the information on form 668(y) in order to properly complete form 12277. On form 12277 you shouldn't have a problem completing lines 1-9 using the information from your form 668(y). On line 10, "Current Status of Tax Lien" make sure you check the box that indicates the lien has been released. On line 11, "Reason for Request Withdrawal of Federal Tax Lien" you must check the box that indicates Tax payer, or the Tax Payer Advocate acting on behalf of Taxpayer believes Withdrawal is in the best interest of the Taxpayer and the Government. On Line 12 you must give an explanation for the withdrawal request. In this section you must write, "As per the fresh-start program, I am requesting that this lien be withdrawn. Once reviewed and approved, please forward copies of the withdrawal notice to:"
Equifax Information Services, Inc.
P.O. Box 740214
Atlanta, GA 30374
Transunion Consumer Solutions
P.O. Box 2000
Chester, PA 19022-2000
Experian
P.O. Box 4500
Allen, TX 7501
Submitting your documents to the IRS
When you have completed form 12277 you will need to send it to the correct IRS office or their response could be delayed. You will find the information on your form 668(y). Form 668(y) will have the address of the IRS office that filed your Notice of Federal Tax Lien. This location varies depending upon the state you lived in when the tax lien was originally filed. If you do not have that information, get a copy of IRS Publication 4235. It has the contact information for the IRS Collection Advisory Group for the state where your lien was filed. If you call them they can tell you to which IRS office you should submit your documents.
Contact the credit bureaus
When you receive a response from the IRS (if it is positive) send that as an attachment with a letter to all three credit bureaus requesting the notation of the lien be removed.
