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How to get a tax lien removed

What does it mean if you have a tax lien?
September 21, 2022

How to get a tax lien removed

How to get a tax lien removed

  • Pay your tax bill. Sounds obvious, but in most cases paying your back taxes is the only way to stop a tax lien or tax levy. “The most important thing I can tell you is to cooperate with the collection action. If they ask for something, you give it to them. If they reach out to you, reach back. Communicate with them,” Klasing says.

  • Get on an IRS payment plan. Your tax balance will still accrue interest and penalties until it’s paid off, but if you allow the IRS to take at least three consecutive payments right out of your bank account (called a direct debit installment agreement), you might convince the IRS to withdraw the federal tax lien from public record. (You’ll still have to pay your tax debt, of course.) You don’t necessarily need to hire anyone to get on an IRS payment plan — you can apply right on the IRS website. Fees run from $0 to $225 depending on the plan and your income.

  • Ask for an offer in compromise. An OIC, or offer in compromise, is an offer to settle your back taxes for less than the full amount you owe. Beware: There are lots of rules, and the IRS typically accepts fewer than half of the applications it gets in a year. To even be considered, you need to have filed all of your tax returns, plus make required estimated tax payments for the current year. You also won’t be considered if you’re in bankruptcy or are being audited.

  • File an appeal. You can ask for a collection due process hearing from the IRS Office of Appeals if you want a review of a lien or levy notice. Also, if you disagree with an IRS employee’s decision about a lien or levy, you can ask for a conference with the employee’s manager and ask the Office of Appeals to review your case.

  • Bankruptcy. It’s not a pretty option, but in some cases, it can get rid of tax debt. However, it’s often a long process, there are a lot of rules and it doesn’t always work, Klasing warns.

» MORE:How to get rid of your back taxes