Getting an IRS Tax Lien Released

How Can I Get a Federal Tax Lien Removed?

Option 1 — Recently Approved IRS Policy

The IRS approved new rules to assist struggling Taxpayers. The new rules state that the IRS will withdraw tax liens filed against Taxpayers who meet certain criteria.

Specifically, if you owe less than $25,000 to the IRS and enter into a payment agreement, the IRS will withdraw the lien. Before the IRS will do so, you must agree to have your monthly payments directly debited from your bank account each month. Additionally, the IRS will not withdraw the lien until a few payments have successfully been made through that direct debit authorization, so that they know you are operating in good faith.

Option 2 — Full Pay Balance

The first way, obviously, is to pay the IRS the amount of back tax due on the lien. This can be via an IRS Payment Plan or through full payment. Federal Tax Liens come out by tax period so you may owe more than what is on the lien. You must be careful to ensure that your payment is applied to the period under federal tax lien or you could end up sending a big payment and still having a Federal Tax Lien.

NOTE: It may be that paying the lien is not the best use of your money, especially if you know another IRS tax lien is on the horizon. This is a situation where professional guidance is essential and could save you thousands if not hundreds of thousands of dollars.

Option 3 — Subordination of Lien

IRS Tax Lien Discharge or IRS Tax Lien Subordination — basically, you request the IRS to release or subordinate (allow another secured creditor to move ahead of the IRS) their interest. The IRS will only approve these requests if it is in their best interests. For instance, if you have a home with equity they may subordinate their lien to a lender who refinances the property in exchange for a piece of the proceeds. Even experienced tax attorneys struggle with this process so professional guidance is strongly recommended.

Option 4 — IRS Settlement

Make a settlement with the IRS and then pay the settlement. The IRS does not engage in "Let's Make a Deal," so to reach a settlement you must go through their settlement programs — the Offer in Compromise and the Penalty Abatement Request.

Option 5 — Expiration of Collection Statute

Wait for the Collection Statute Expiration Date to pass and the Federal Tax Lien will self-release. In practice you will probably still need to call the IRS to obtain copies of the release documents, ensure that they are filed with the proper county recorder's office, and notify the credit bureaus yourself. The IRS rarely releases liens after the statute of limitations has expired on their own — you almost always have to do the leg-work yourself.