Getting an IRS Tax Lien Off Your Credit Report...

Federal tax liens are trouble for your current, and your future, financial health. IRS tax leins will cause your credit score to drop, make it difficult to buy and/or sell assets, and become a matter of public record. In order to fix, reverse, or stop all of this, and give your credit report a clean slate, the IRS must remove the lien by either issuing a lien release or a lien withdrawal.

A lien release will be issued by the IRS:

• Within thirty days after you have paid the entire tax due (including penalties and interest)
• Within thirty days after you have submitted a bond, guaranteeing the full payment of the tax due
• Ten years after the tax was assessed-in these cases, the Collection Statute has run out and the lien will automatically release (if the IRS has not re-filed the original lien)

A lien must be withdrawn, by law, if the IRS:

• Filed the lien notice too soon or did not follow the correct procedure
• Agreed to an installment agreement for you to pay the tax (unless your agreement specifically states that a Federal Tax Lien will be filed)
• Will be able to collect the debt faster as a result of the withdrawal
• Agrees that it is in their best interest, and yours, to withdraw the lien

A release and a withdrawal have very different outcomes for your credit report.

In 2009 the National Taxpayer Advocate reported that each of the three major credit reporting agencies keep your unpaid lien information on your credit report for different amounts of time:

• Experian will show an unpaid lien for fifteen years,
• Equifax for ten years, and
• Transunion will show it forever

Once a lien withdrawal is received all three will delete the entire history of your Federal Tax Lien. The bad news is that if a lien is released, it will continue to show on your credit report for the next seven years.

The National Taxpayer Advocate is trying to help American taxpayers. The previous policy of the IRS did not allow for a certificate of withdrawal to be filed after a lien had been released, meaning that the lien would automatically show up on credit reports for the next seven years. Based on the National Taxpayer Advocate's report, the IRS has updated its policy so that a lien withdrawal certificate can be filed after a lien is released, so that individuals are given a clear credit report.

Income Tax Owed