Dec 1, 2007

Your Tax Lien - It goes away when you pay?

Tax liens are painful. They kill your credit rating (out of the three credit reporting agencies, TransUnion usually reports it first), hinder your ability to buy/sell assets, and put you on public display for your tax debt.

How do you rid yourself of a tax lien. Tax liens exist until the amount of tax is paid or abated in full. In short, until the IRS says you have a -0- balance due. Tax liens are filed by years. Hence, it is possible that the tax lien has several years filed and several unfiled. Payment of one year’s liability may in fact release a tax lien (for that year only) if there are no other years on the tax lien.

Obviously most cannot pay their tax debt- hence, the only manner to release the lien is via abatement. Abatement is via: offer in compromise (if applicable), penalty abatement request (if this is all you owe), expiration of the collection statute of limitations, and/or filing amended returns, if warranted.

If an Offer in Compromise is accepted and paid, the IRS reduces you balance to -0- and releases the lien(s). If you are successful in eliminating your debt (including penalties and interest) via penalty abatement or amending tax returns, then your lien(s) will be released. Furthermore, if you have waited the IRS out through its ten-year collection statute of limitations, then the lien will self-expire on the date according to the lien.

Absent these methods, the lien is there to stay.

1 responses:

Ecuskully02 January 15, 2008 at 12:13 AM  

I've heard of waiting out the ten years but what do you do if the lien is still there after the ten years? Will filing bankruptcy take the lien off?
Thanks again for all the great information.

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