By Robert S. Schriebman, SJD
An IRS tax lien is serious business. It is designed to raise havoc with your life and finances. It negatively impacts your credit rating. It may even prevent you from obtaining various forms of insurance such as life insurance. How do you get an IRS tax lien out of your life? Perhaps the easiest way is to pay it off, including penalties and accruing daily-compounding interest. If the IRS accepts your Offer in Compromise, the usual practice is for them to release the lien. Liens can also expire from the passage of time. Please see my article entitled WHEN DOES AN IRS TAX LIEN EXPIRE?
For purposes of this article we will assume that your tax lien has expired solely from the passage of time.
The IRS, probably due to the economy, is backlogged in just about all areas of its functions. When things were not so intense, the IRS would notify the taxpayer that the lien was released by sending a copy of the lien release document to the taxpayer concurrently with filing the release with the County Recorder's Office. The IRS still follows this practice but things are not moving as fast as they use to move. This, of course, does not help your credit rating.
My world view of this area is through the eyes of a tax lawyer. I do not pretend to be a professional practitioner handling debtor-creditor problems or controversies. I am not a bankruptcy specialist. Therefore, I advise you to contact these types of professionals as they may have different and perhaps more efficient solutions than I am suggesting in this short article.
When I want to obtain a lien release for a client who is taking the position that the IRS lien has expired, I consider ordering from the IRS an account transcript for each tax year in issue. A transcript is a very useful tool. It provides all kinds of information as to if and when a tax lien has expired. Assuming that the transcript gives me a favorable report, I then contact the IRS Central Lien Unit in Cincinnati, Ohio. I provide the Lien Unit with the information necessary to convince them to issue a Release of Federal Tax Lien and to notify the County Recorder as well. This unit has a substantial backlog of requests and it is not uncommon for the lease to take one or more months to obtain.
Some tax practitioners contact other offices within the IRS to request a lien release. Some practitioners contact the Taxpayer Advocate's Office in their geographic area to seek assistance. Other practitioners have informed me that they work with an IRS unit known as the IRS Advisory Group. The Advisory Group also has offices throughout the country. Usually escrow companies work with the Advisory Group when time is of the essence due to real estate sales or issues relating to title.
Once you receive the official Release of Federal Tax Lien, I suggest that you send a copy to the major credit reporting agencies and ask that the lien be removed from your credit report. I suggest that you send your correspondence by certified mail with a return receipt requested.
© Copyright 2011. No part of this article may be taken and used in any way whatsoever
without the express written consent of Robert S. Schriebman
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, "IRS Tax Collection Procedures - A Manual for Practitioners" published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See "California Tax Collection Practice and Procedures" and "California Taxation Practice and Procedure", both published by Commerce Clearing House.