When is an IRS Tax Lien Not Filed with An Installment Agreement?
When the IRS files a Tax Lien, it affects your credit and certainly makes it more difficult to buy a house, car, qualify for any amount of credit, etc. In addition, as the Tax Lien is filed with the County Recorder, it is public record for anyone to see.
Fortunately, the IRS does offer some options to either avoid a Tax Lien from being filed, or to request a release of a Federal Tax Lien.
Note: There is a difference between the Release of a Federal Tax Lien and the Withdrawal of a Federal Tax Lien. A Federal Tax Lien will only be released once the balance due has been paid in full. A Withdrawal can be requested even if there is a balance owed.
A Withdrawal of Federal Tax Lien is a request asking the IRS to remove the Notice from public filing and letting other creditors know the IRS is no longer competing with other creditors for your property. Here are some ways to have a Tax Lien withdrawn:
- Your balance due is $25,000 or less liability only. So, if you owe on penalties and interest, that is not included in this amount. The liability only means what amount was due when you filed your returns. In addition, you do not need to provide any financial documents to enter into this agreement.
- You are on a Direct Debit Installment Agreement and are able to pay your balances due in full within 60 months or before the Collection Statute expires, whichever is first.
- You are in compliance; meaning all tax returns are filed, no additional balances have been accrued and you are current with all federal tax payments.
- Once entered into the Direct Debit Installment Agreement you have made three consecutive payments.
- You have not defaulted on this Installment Agreement or any previous Installment Agreements.
If the IRS has not yet filed a Federal Tax Lien on the balances you owe, there are a couple ways to avoid a Lien being filed, but you must act quickly.
- You are able to full pay your balances due within 120 days, or
- Your balance due is $50,000 or less liability only, and you enter into a Direct Debit Installment Agreement. In addition, you do not need to provide any financial documents to enter into this agreement.
A last option to mention, but is rarely accepted, is the IRS will consider a Withdrawal of Federal Tax Lien is you are a broker or financial advisor and a Tax Lien will affect your business or endanger your employment. The reasoning is, if a Tax Lien is filed and you lose your job, you are no longer making an income and therefore cannot pay your balances due in full. However, to make this request the IRS will require proof, such as; letter from an employer, or job description stating this fact. As with most things with the IRS, the burden of proof falls on you which is why this route is a bit more difficult to go through.