When the IRS files a Federal Tax Lien all kind of bad things happen to you. The lien is filed with the county clerk, or whatever that position is called in your state, and it then becomes public record. The credit reporting companies pick it up and your credit rating immediately takes a nosedive. You can’t borrow money. The interest rate on your credit cards will go up. Bottom feeders write and call you with empty promises that they will solve your tax problem. They will give you an amount that the balance will settle for without knowing any of your financial information. All too often they will take your money, do nothing, break your heart, and make you mistrust all of us that practice in the area of tax resolution.
If you enter into an installment agreement with a direct debit of your monthly payment you might be able to get the lien released. When the balance is satisfied the lien will be released. That is with a full payment, bankruptcy, offer in compromise or the collection statute expiring. When the lien is released it’s important that you send a copy to the credit reporting companies and request they enter the information. Even after that it’s still on your record.
In order to make it go away you need to file a Form 12227 Application for Withdrawal of Notice of Federal Tax Lien. After this is filed and accepted by the IRS, they will withdraw the lien. You might ask what the big deal is. A release is still in the record. A withdrawal takes it out of the records. It’s like a big eraser. It disappears. You will then want to send it to the credit reporting companies with a request that it be removed from your file. Also send it to all of your creditors with the same request. Your credit rating should immediately go up.
A lien can only be withdrawn when the liability is satisfied as a result of full payment, abatement of completion of the terms of an OIC. A bankruptcy would be considered an abatement. The lien will not be withdrawn because of the expiration of the collection statute.