After exhausting all efforts to resolve your tax debt, you have come to the conclusion that the only thing that is available to you is to pay the darn thing off. If that is you, and this conclusion was helped met by talking with a licensed professional, there are some smart options for you to take moving forward. One of those options is to enter into a payment plan where it doesn’t matter how much money you may have left over after bills are paid and one in which liens are removed and new liens won’t be filed. This is called a Streamlined Payment Plan.
First, do you owe less than $50,000?
In order to enter a streamlined payment plan, you have to owe less than $50,000 to the IRS. Thankfully this amount was raised from the recently previous amount of $25,000. This amount is the assessed tax liability amount, not the actual amount that you owe including interest and penalties. Therefore, you could possibly really owe about $52,000 and still qualify. If you owe more than $50,000 in assessed tax liability, then this payment plan is not an option for you until you get to that threshold. The IRS will normally ask if it is possible for you to pay the debt down to get to that level, either in lump sum or in payments. If you owe more than $50,000 you have to negotiate a payment plan and go through finances with the IRS.
Your payment amounts are calculated on a 72 month payment plan. This is true unless the tax debt will expire before then. If that is the case, then the calculations are met by how many months are left on the statute period for the IRS to collect. If it comes to the point that they are higher because of this fact, you should talk with a licensed professional about your options in doing a partial payment plan or even a high offer in compromise. So for most, if you owe let’s say $10,000, your monthly payments would be about $140 a month, regardless of your amount of income, expenses, or equity in assets.
The beauty of this type of payment plan really lays with the lien protection. If no liens have yet been filed against you, by entering this type of plan, no liens will be filed as long as you remain in the plan. If a lien has already been filed, then you can petition to have the lien removed through a lien removal process. This falls into qualifying criteria as we discussed in a previous blog article.
Do I need to hire someone to do this?
Most simply, no. If you know you don’t qualify for relief of any kind, and have scheduled to hire someone down the road for penalty abatement, and don’t have any live liens filed against you, you don’t need to hire any company to setup a payment plan for you. It takes about an hour, most of which is because you’ll be on hold waiting for the IRS on the phone. Ask for a streamlined payment plan, and you’ll be set. If you want to talk with someone about penalty abatement, lien removal, or to make sure you don’t qualify for other relief types, then call 619-352-4188.
There are a lot of people that owe tax debt to the IRS. Recently a spokesperson from the IRS stated that an estimated 8.2 million Americans owed back taxes. That’s a lot of people. Most of these people owe a minimal amount and don’t qualify for a settlement of any kind with the IRS. However, what a lot of these 8.2 million have in common can be found on their credit report. Normally accompanying tax debt is a tax lien, and this shows its ugly head on a credit report, glaring at lenders, landlords, and credit companies. So what can be done?
First, how to qualify to have your lien removed at the IRS
In order to qualify to have a tax lien removed, your balance must be paid in full, through a settlement or in full payment, or you must be in a streamlined payment plan. There are of course ways around a lien temporarily, but the focus of this article is to get it removed completely from your credit report. If you paid the balance in full, then of course the lien is eligible as there is nothing to back the lien on. If you have reached a settlement with the IRS and that settlement has been finalized and paid in full, then there is no debt remaining and therefore once again you can have the lien removed. If you owe less than $50,000 to the IRS, you can qualify for a streamlined fresh start payment plan and are protected from new liens filed and are also eligible to have your past lien removed after proof of successful payments. Therefore, in order to get the lien removed, the debt must be paid in full or you must be on the right type of payment plan.
Make the right request
While the law says that the release will automatically happen, this is not often the case. What is necessary sometimes is a request in writing to the IRS. You will want to make a request to have the release of tax lien form. Once you obtain this form, this only “releases” the lien, but it will still show on your report. Thus, the next step is normally the most important. You have to request to the IRS to “withdrawal” the tax lien. Prepare a cover letter, the right form, attach all necessary documentation, and even include some IRS publications to help guide them.
You received the Withdrawal letter, now what?
Now you have taken all necessary steps to get the balance situated, the lien removed, and the lien withdrawn. However, it is still showing up on your credit report as “removed”. It can take up to seven years to get this removed through the normal process, so you should take steps to expedite the process. Contact the three credit bureaus, dispute the lien, and provided a copy of IRS communications to make the argument that to have it deleted from your report, NOT show “removed.” Credit agencies will verify the information with the counties the lien is filed with and then should remove from credit report within 60 days.
Sounds easy enough….not really…
There are a lot of moving parts and a lot of agencies that you’ll be dealing with. There are a lot of forms to organize and complete, and some legal drafting on your request/demand letters. Even when a professional takes control, it can be removed on 2 credit agencies and not all 3 and therefore more work is needed. Luckily, we here at Tax Debt Services have had the experience in making these arguments for our clients and are familiar with the language, forms, and processes of removing a tax lien. Call 619-352-4188 to see if we can help get your credit report free from tax liens. www.taxdebtservices.net