Finance

A Step-by-Step Guide on How to Remove a Tax Lien

Did the IRS put a tax lien on your house after you failed to file and pay your federal taxes? If so, you’re going to need to satisfy the terms of your tax lien ASAP or else you won’t be able to sell or even refinance your house.

With that being said, people aren’t always aware of what they’ll need to do to remove a tax lien. This could put you into a difficult spot and cause a lot of stress and chaos in your personal life.

Today, we’re going to walk you through the different steps you’ll need to take to remove a federal tax lien. It’ll make removing a tax lien slightly easier on you and prevent a tax lien from taking a big toll on your life.

Continue reading to find out all about how to remove a tax lien once and for all.

Start by Paying Off Your Tax Debt

Before you can remove a tax lien, the very first thing that you’re going to need to do is figure out a way to satisfy your tax debt. The IRS isn’t even going to think about letting you remove a tax lien if you aren’t able to pay what you owe to them.

This might sound intimidating at first. But the good news is that the IRS will typically offer you a wide range of options in terms of how you can pay them the money that you owe.

They’ll obviously give you the opportunity to pay them with one lump sum payment if you would like. This is the quickest and easiest way to get things squared up with the IRS so that you can remove a tax lien.

But if you aren’t able to do that, you might also be able to put a payment plan into place so that you can repay the IRS over time. It would be well worth looking into this option so that you can start to take steps towards removing a tax lien.

Find Out If You Qualify to Remove a Tax Lien Early

In certain instances, the IRS is going to require you to repay your entire debt to them in order for you to remove a tax lien. But there are some situations in which they might consider taking a tax lien off your home earlier than expected.

Despite the reputation that the IRS has, the organization doesn’t actually want to ruin people’s lives. So if the IRS sees that you’re making efforts to repay a tax debt and that tax debt falls under the $25,000 threshold, they might be willing to remove a tax lien for you ahead of schedule.

After you get the ball rolling and have made several consecutive payments on a tax debt, you should reach out to the IRS to see if you might qualify to remove a tax lien early. It definitely couldn’t hurt to ask to see what they have to say in response.

Put In an Application to Remove a Tax Lien

If you pay off the tax debt that you owe to the IRS or if you find out from the IRS that you might qualify to remove a tax lien from your home in advance, you’ll need to put in an application to try and have a tax lien removed. More specifically, you’ll need to fill out what is called Form 12277.

This form requests that the IRS consider reversing another form called IRS Form 668(Y). That is the form that the IRS initially files when they put a tax lien on your home.

If the IRS agrees to remove your tax lien, you’ll receive a third form called IRS Form 10916(c) in response to your application. It’ll let you know that the IRS is allowing you to remove a tax lien for good.

Let the Credit Bureaus Know You’ve Removed a Tax Lien

Once you receive IRS Form 10916(c), you might think that you’re in the clear as far as your tax lien is concerned. But the reality of the situation is that it’s going to be your responsibility to let the credit bureaus know that you’ve gotten the OK from the IRS to remove a tax lien.

You’ll need to reach out to each of the three credit bureaus separately to advise them on the removal of your tax lien. If you don’t know this already, the credit bureaus that you’ll need to contact are:

  • Equifax
  • Experian
  • TransUnion

Until you’ve made contact with these credit bureaus, your tax lien might still appear on your credit report and make it difficult to sell or refinance your home. So you should try to touch base with them sooner rather than later if you can.

Speak With a Tax Relief Professional If You’re Still Confused About Removing a Tax Lien

Is your head still spinning right now even though we’ve broken down the steps that you’ll need to take to remove a tax lien? Or would you just like the peace of mind that comes along with getting help from a professional while removing a tax lien?

Then you should reach out to a tax relief professional for assistance. They’ll be able to take a closer look at your specific tax lien situation and show you how to remove a tax lien without any worries.

Remove a Tax Lien to Stop It From Creating Further Issues for You

If you let a tax lien linger for a long time, it’s going to create all kinds of complications for you. You’re going to struggle to sell or refinance your home at some point. And it might also lead to other financial issues.

You should avoid these things by making it your mission to remove a tax lien as soon as you can. Follow each of the steps listed here and you should be able to make this particular problem a thing of the past.

Want to get some tips on how to hire the best tax relief professional around? Find them by poking through the rest of our blog.

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