How to Release Your Federal Tax Lien – 10 Golden Tips
Once the Federal Tax Bonds have been filed, the next project is to try to release them. Last year, the Internal Revenue Service filed approximately 950,000 bonds. That number is expected to rise considerably. Most taxpayers are lost and have many misconceptions about how to release federal tax liens. Here are 10 golden tips that cover just about every path to getting that dreaded Federal Tax Link published.
1. Make sure you actually owe the tax and that the tax assessed is the correct amount. Don’t assume that what the IRS says you owe is correct. Compare your tax records with the actual notice from the IRS. If you did not file your own tax return, the IRS may have filed a substitute return, an SFR. Generally, the amount the IRS assesses is much higher because they only give you standard deductions. When this happens, fill out a correct tax return and send it to:
IRS
ASFR Fresno Campus
Unit stop 81304
post office box 24015
Fresno, California 93779
This unit of the IRS processes the tax return now filed by the taxpayer. On filing the new tax return, send a cover letter requesting a “reconsideration.” This could take up to 3-5 months, so please be patient.
2. Please pay the tax in full as soon as possible. This is the fastest way to release the Federal Tax Link. If you pay with a cashier’s check, the IRS will immediately release the Federal Tax Liaison if you walk into a local office. Be sure to get a copy of the lien release and find out when the IRS will send a copy to your local court. You’ll also want to check with the credit bureaus within 30 days to make sure they’ve posted the release satisfaction on your credit report.
3. Submit a Compromise Offer under Doubt about Collection Capacity. Pay the terms of the Offer in Compromise and the IRS will release the federal tax lien once the Offer is paid in full and all terms are met.
4. Find out if the statute of limitations has expired in the tax years involved. The IRS has a 10-year time frame in which they must collect the taxes. The 10-year period begins when the IRS performs the assessment on the IRS computer. This is usually 6 weeks after the returns are filed. If the statute period has expired, the lien is automatically released by statute, but the IRS will not send a release. You will need to formally ask them for a copy of the release. If you would like a paper copy of the federal tax lien release after the statute has expired, please fax your request to:
IRS Centralized Link Publications
Fax number 859-669-3805
5. Request a bond. The cost of the bond is very high, but the IRS will release the Federal Tax Liaison once the bond is released to them. A bond is usually as much as the federal tax bond payment.
6. Don’t let the Federal Tax Liaison show up first. When the Notice of Intention to File is sent to you, call the IRS and ask for a hearing. This will at least delay the possible filing of the federal tax lien. You can explain to them the reasons why the link submission should not take place.
7. If there are special circumstances that would cause difficulties due to the filing of the federal tax lien, inform the IRS of the situation. Difficult situations can change the circumstances of most cases. The IRS will give due consideration to certain conditions.
8. Contact the Taxpayer Advocate Office if you think there is a problem with the filing and you want the IRS to investigate the situation. The Taxpayer Advocate Office is there for you. Go to IRS.gov to find the office closest to you.
9. If you realized you made a mistake on your own tax return and the liability is incorrect, file an amended tax return so the IRS can correct the issuance of the federal tax lien.
10. A professional tax resolution firm is your best bet to help you. A good tax resolution company with experienced professionals can solve these problems.
As a follow up note, the federal tax lien is very detrimental to your credit score. Most lenders will not lend in the presence of the Federal Tax Link. Do everything possible so that the Federal Tax Liaison never shows up.