If you have a lot of debt – which is surprisingly common for business owners and entrepreneurs – then you could be faced with an IRS tax lien. An IRS tax lien simply means that the IRS gets a portion of any proceeds made when you make a sale. Tax liens can also do serious damage to your credit rating. Even worse; a tax lien could end up on a site like www.tedthomas.com. If someone purchases your tax lien, they could end up owning your property. The good news is that they aren’t permanent. They can be removed. Here’s a look at how to remove an IRS tax lien.
One good thing about dealing with the IRS is that you still have a lot of rights. You are well within your rights to ask for notices and enough time to get the matter resolved. You are also able to issue an appeal for any action the IRS takes against you. That includes liens.
Appealing a tax lien can be a simple process. All it takes is just a phone call. If you aren’t able to start an appeal over the phone, or you want to start as formally as possible, then you must file an official appeal. You’ll need to fill in and submit Form 9423 in order to do this.
The bad news about appealing your tax lien is that the odds of success aren’t that high. If you’ve got yourself a compelling case – such as it becoming impossible for you to pay the IRS back their debt if you also have to pay a tax lien – then you should consider an appeal. There’s no harm in trying and, if it goes well, the lien will be wiped from your record and you have nothing to worry about.
Get Rid of the Debt
The IRS aren’t unreasonable. It’s entirely possible to pay off your debt with an instalment plan or some kind of settlement with the IRS. An Offer-In-Compromise is an example of such a settlement. When you pay off the debt, the IRS should issue you with an IRS Certificate of Release of Federal Tax Lien. You need to get on their case if this doesn’t happen and fill out Form 668(Z). Also get in touch with credit agencies and local counties, informing them that you have settled the lien.
There is a hitch to all of this though. While being released from the lien means that asset sales won’t be impacted, it still stays on your credit report for seven years. The good news is that it’s possible to even do something about this. It’s called the IRS Fresh Start Program.
The IRS Fresh Start Program
The Fresh Start Program was launched by the IRS following the financial crisis, with a focus on people with less than $25,000 in debts. Basically, it allows for the withdrawal of federal tax liens if one meets the following criteria:
- The debt has been resolved and the lien has been released
- If you are following an instalment plan, then you must pay for it through direct debit and have made three payments without defaulting on any of them
- You are up to date with estimated tax payments
- You are in compliance with your past three year’s tax filings
If you fall into that category, then you can send in Form 12277 and have the lien wiped away as if it never existed. If the IRS agrees with you then they issue you and your local county office Form 109169(C). Don’t forget to notify our credit agencies, like you would if anything else on your credit report had been disputed.