offer in compromise

How to Get Rid of the Federal Tax Lien for Good

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Now you have taken all necessary steps to get the balance situated, the lien removed, and the lien withdrawn.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.


Today’s IRS Offer in Compromise is the Most Generous Program to Date

The recent rule changes brought out under the IRS’ fresh start program has allowed thousands of Americans to now be eligible for tax relief where before they wouldn’t even qualify for a settlement.  So, how does the program work?

What is an Offer in Compromise?

The Offer in Compromise is a program that allows people to settle their tax debt for less than what they actually owe.  There are two main type of offer settlements 1) Doubt to Collectability and 2) Doubt to Liability.  While Doubt to Liability seems like an obvious choice for many, the hard truth is that most people that owe tax debt, truly do owe the tax debt, but just struggle with paying that debt off.  Therefore, the fresh start program implemented by the IRS is focused on the Doubt to Collectible offer in compromise.

What Amount Can I Settle For?

Doubt to Collectability can mean a lot of things.  There are hundreds of court cases, legislation, and directives that build the definitions to that term.  However, it can be simplified into a two part test.

Test 1) Given the disposable income per month, if the taxpayer paid that amount per month every month until the tax debt expired, would the debt be paid in full?

Test 2) If the amount would not be paid in full, then an equation is used:



Tax Debt settlements are very different from other types of settlements where the debtor cannot just offer the creditor money as a percentage of the debt and expect success.  If the two tests fail or show a settlement amount higher than the actual debt, then the Offer program is not right for you.

How to Qualify

1.  Taxpayer is compliant with tax returns for last six years.

2. Taxpayer is compliant with tax withholding and/or quarterly estimated tax deposit requirements.

3. Taxpayer is protected from collection actions.

Why would the IRS do this?

The IRS would rather ensure that you are a good taxpayer from this point forward than destroy your life because of some past mistakes. They are willing to forgive your old debt in exchange for future compliance and a promise to not owe taxes again for at least the next five years.

Do I qualify?

Some companies will charge you to see if you qualify, other companies will tell you that you qualify without actually gathering enough information to do the two part test.  Contact us at Tax Debt Services at 619-887-4881 and we can determine if you qualify for free.

If I do qualify, why would I need to hire a professional?Image

Criminal court cases, lawsuits, corporate mergers, vehicle repair, bankruptcies are all examples of situations where anyone can do things by themselves.  People can represent themselves in court, repair their own engines, and file the lengthy paperwork of bankruptcies by themselves.  How does this normally work out for the person who isn’t a professional? Normally not so swell.

Hire a company that has professionals who do this for a living.  This is tax debt and should be thought of as a serious and urgent concern.  Why would you not want to get it done right?