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IRS lien release - can you remove IRS lien from credit report?

Mon Aug 25, 2008 11:08PM | By Tony

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Once you get IRS lien on your credit report, you can't just remove it. It stays for 7 long years after it is paid, showing as PAID. And your credit scores won't look pretty for a while. When it comes to Internal Revenue Service, it is better to have a tooth pulled without anesthesia. Dennis Miller says something along these lines on my local radio station when promoting some tax service firm. You must remove IRS lien from your property by getting a lien release as soon as possible. Let us see how the process works.

Basically putting a lien on your property allows IRS to legally claim this property as security or payment for your tax debt. The procedure starts with a Notice of Federal Tax Lien which can be only filed after 2 things have happened,
- first, you receive a Notice and Demand for Payment, which is a bill that tells you how much you owe in taxes
- second, you don't fully pay the debt within 10 days after IRS send this notice

It doesn't matter if you decide not to pay, or a Notice and Demand for Payment gets lost in mail. A lien is promptly created for the amount of your tax debt. By filing notice of this lien, your creditors are publicly notified that IRS has a claim against ALL your property, including property you acquire after the lien is filed. This lien attaches to all your property including your house, car and to all your rights to property, such as your accounts receivable, if you are in business, and establishes priority in many situations, such as bankruptcy proceedings or sales of real estate. Basically IRS lien is to be satisfied first almost under any circumstances.

Your credit scores and rating are of course deeply harmed. So it is very important to obtain IRS lien release. Again once it is filed, you can't remove a lien from your credit reports. Normally IRS issues a Release of the Notice of Federal Tax Lien within either,
- 30 days after you pay the tax due, plus interest and fees that state and/or county charges to file and release the lien
- 30 days after IRS accepts a bond that you submit, guaranteeing payment of the debt

If IRS doesn't knowingly or negligently release a Notice of Federal Tax Lien when it should be released, you may sue for damages the federal government, but not IRS employees. Make sure that you get a copy of the Release of Federal Tax Lien that was executed or signed by the IRS and filed of record in the appropriate county. Keep this document forever, those pesky liens have a tendency to reappear years, even decades after their release.

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