Wednesday, February 18, 2015

Dealing with IRS Tax Liens

Unpaid taxes continue to cost the U.S. economy hundreds of billions of dollars, with most debts being left unpaid or only partially paid. In response, the Government Accountability Office (GAO) submitted in 2012 a report to Congress proposing that the Internal Revenue Service (IRS) report outstanding tax debts to credit bureaus to improve tax collection.

There’s no word of when the IRS will standardize this practice, let alone whether or not the agency plans to do so. Tax debts normally don’t reach credit bureaus as part of their policy to safeguard sensitive information.

If you are dealing with an IRS tax lien, it pays to know what to do.

Credit bureaus don’t have difficulty acquiring tax liens because these are public records. Liens prevent you from selling or giving away property. Most negative items on your credit report go away after seven years, but not tax liens. The only way to get rid of them is by way of a settlement, whether through a full payment or an offer in compromise.

If you need tax liens removed right away, pay your dues and file a Form 12277 for withdrawal of a filed Form 668(Y), a Notice of Federal Tax Lien. Withdrawn tax liens will be removed from the credit reports almost immediately.

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