There is a great debate going on in the tax practitioner community right
now with respect to liens. The IRS and many other state revenue
organizations uses tax liens to secure their interest in your
outstanding tax debt. Liens are a source of debate in the tax
practitioner community because their effectiveness in accomplishing any
real purpose (particularly when the taxpayer does not have any assets)
is debatable. In addition, as you noted, they damage your credit score
and prevent you from potentially borrowing to satisfy the liability.
Here are two of the more common questions that I get asked in my
practice.
How to Release or Remove a Lien
The release of a
federal tax lien is subject to three major conditions: your debt is
paid in full, payment with regard to your debt is guaranteed by bond,
and the period of collection has ended (Publication 594, "Reasons We'll
'Release' a Federal Tax Lien," 6/4/2013). The release of the lien means
that the IRS has cleared both the lien for your debt and the public
Notice of Federal Tax Lien. The IRS will file a Certificate of Release
of Federal Tax Lien with both state and local authorities.
There
are additional options for releasing and/or having a lien released. For
example, if you enter into an "Installment Agreement to satisfy the tax
liability, unless the Agreement provides otherwise, the IRS may withdraw
the Notice of Federal Tax Lien" (Publication 594). The IRS may release a
lien to "help you pay your taxes more quickly" (Publication 594). If
the IRS did not follow the proper procedures, the lien may be released.
If the lien was filed during a bankruptcy automatic stay period, the
lien may be released. Lastly, if it is in your best interests and the
interests of the government, the IRS may release a lien.
Lastly, a
lien may be released when a taxpayer applies for a discharge (of a
federal tax lien), which is defined as a removal of the lien from
specific property. There are two major circumstances that contribute to
the discharging of a federal tax lien. For one, the IRS may issue a
Certificate of Discharge if you are selling the property. Removing or
discharging the lien from the property is usually satisfied at the time
of sale. For more information about how you might qualify for a
discharge, review Publication 783, Instructions on How to Apply for a
Certificate of Discharge of Property from Federal Tax Lien.
Article Source: http://EzineArticles.com/8115078
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