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Hi! A Federal Tax lien was filed against me with the Orange County, California Recorders office in February, 2003. I completed a payment plan and the lien was fully released on all three credit bureaus in early 2006. I thought the lien would be removed from my credit report in Feb. 2010, but it seems from what I'm hearing that it may remain for seven years AFTER it was released! I have excellent credit except for this released lien. I did once dispute the lien with the bureaus, but all they did was check with Orange County, who verified the disputed lien. I'm not sure what to do. I desperately need this lien OFF my credit report NOW! How do I go about requesting or getting the IRS or SOMEONE to allow an early release of this lien. With every other kind of debt, the statute of limitations is 7 years from the date the debt was incurred! I can't believe the IRS can get away with making it 7 years after it's PAID!
HelloCustomer Tax liens remain on your credit reports for 7 years from date satisfied not filed. If they remain unpaid they can stay longer, even though they are only collectible for 10 years. However, even though the lien remains on your credit report for 7 years from the date is was paid, it should show that it was paid. The only way to have the paid tax lien removed entirely from your credit report is to write a letter to the credit bureaus disputing the validity of the lien. At that point the credit bureaus are obligated to request verification from the IRS that the lien exists or existed. Sometimes once a lien has been paid in full, the IRS will not even bother to respond to the inquiry, in which case it would then be removed entirely from your credit report. But that is the only way to have the lien removed sooner than the 7 year allowed period. I am sorry that there are not more options to offer you here, but legally the credit bureaus carry this lien for 7 years from the date the tax was paid, and not when it was first incurred. However, even though the record of the lien exists on your report, it should show as paid status. Thank youCustomer and let me know if you have more questions. I am happy to help you with whatever I can.
I did dispute this with the credit bureaus. All they did was check with the Orange County Recorders Office, not the IRS, since it is the Recorders office that filed the report of the lien, and of course the Recorders office said the information they reported was accurate. How do I get the credit bureaus to take the dispute back to the IRS, since they didn't do that the first time? When you file a dispute, they only go back to the agency responsible for the report, not the actual source of the information. It's like trying to get them to go back to the source of a report from a collection agency. They only go back to the agency, not the original source. Are you suggesting that a letter will do better than a phone call to process the dispute? I can do that if you think it might actually help. Any suggestions? Again, my goal is simply to have this removed from my credit report. Are there circumstances when the IRS wil do this that aren't the result of their filing the lien in error? As far as legal options are concerned, I'm tempted to file a formal complaint about this process with the Department of the Treasury - and my Congressman. It is flat-out unconscionable that the IRS gets away with not following the same rules every other creditor has to follow - that is, seven years from the date the lien was filed.
Hello againCustomer I agree with you that it seems unfair that the IRS has different rules for credit reporting purposes, but unfortunately the IRS has a lot of leverage that is not afforded to other organizations. For instance, when you owe a tax debt they do not need a court order to garnish your wages or place a lien on your property. And they are the only agency in the world that can also garnish even your Social Security payments. So it is yet just another demonstration of the power they really have. Writing to your congressman is certainly an option, but like anything else, the chances are slim that anything would actually be done about it. As far as getting the agency to go back to the IRS, you should write a letter and dispute the actual validity of the lien, and not the fact that it was paid. The Orange County Recorder of Deeds cannot verify that the lien is legitimate. They only know that it was placed on your record and they know it was paid, but they cannot attest to the fact that it was legitimate in the first place, which is what you need to question. By doing that, the credit bureau will have to go back to the IRS. Now the IRS can, of course, still respond to the credit bureau to attest to the fact that the lien was legitimate. All I am saying is that in many cases they will not bother to even respond to the credit bureau if the tax has been paid, and if they do not respond then the lien could be removed entirely. And this is the only way to actually accomplish having that done. The IRS will not actually ever willingly remove a lien prior to its natural expiration date, other than to verify it has been paid. Thank youCustomer and let me know if you have more questions.
Okay . . . So . . . I think I sort of understand. The letter I send should clearly state that I am disputing the accuracy of the information provided by the IRS to the Orange County Recorder, not the fact that there is a record on file with the county. It sounds as though I need to insist that they verify the information with the IRS directly, and not with the county. In this letter, do I need to remind them that if they cannot validate the information directly with the IRS within the prescribed time, it should be removed? I don't think I need to say much more than that I am disputing the information the IRS filed with the county. Of course, I need to provide them with all the information they will need to process the dispute (my SSN, for example, and my contact information). Really, what I'm asking is how to get them to ignore the county recorder's office filing and rely solely on the response (or lack of response) from the IRS. I'm not sure quite what to say. Any advice in that regard? How can I best word this letter to get them to do that.
Hello againCustomer What you have just outlined briefly is exactly how you should word your letter. I would tell them that you are not contesting the fact that a lien was filed, but rather the validity of the lien itself, and that you want the validty of the lien verified with the IRS who filed the lien, and not with the Orange County Recorder's Office who can only verify that the lien was put in place. You can, of course, remind them that if the IRS is not able to verify the validity of the lien they are obligated to remove this from your record report, however, that should be done automatically if they receive no response from the IRS. Once they notify the IRS that the validity of the lien has been challenged, the IRS has 30 days in which to respond. If no response is received in that time period, they must legally remove the lien from your record. Now if the IRS would come back and respond at some later date, they could once again place the lien on your record, but if the IRS never responds at all, then the lien should remain off your record permanently, and that is what you are hoping happens here. If this was helpful please press the Accept button. Thank youCustomer and let me know if you have more questions.
One last question: Can you please tell me if you know of anyone who used a letter like this and had their tax lien removed from their credit report permanently. My real problem is that they use seven years after the date the lien was released and not from the date it was filed. I think goes totally against the Fair Credit Reporting Act. I'm just wondering if you know of anyone else doing this successfully and if I'm following the same basic steps that person or those individuals followed. My grounds for the dispute would be to require the IRS to provide the credit bureau with a valid "Date of Last Activity" the way normal creditors do, and to say that the date on which the lien was filed is not the correct Date of Last Activity. Or should I just simply ask for verification and not go into any detail? Sorry, I just want to get this right. Thanks for all your help!
Hello againCustomer I personally only have experience with one client who was in a similar position, and they were successful in having the lien removed by following this procedure. But I know of several other cases that were also apparently successful, although they were clients of other colleagues. As far as the letter that you write, you can either challenge the validity of the lien itself, or challenge the date that it was paid in full. Either way, they must verify this information through the IRS and not through Orange County. The hope here is that the IRS will simply not respond to either type of inquiry, and while there is no guarantee that they will not respond, it has been a method that has worked in the past. The main concern of the IRS is that the tax has been paid, and so there is a very good chance they will not go to the trouble it will take them to submit paperwork proving that the lien is legitimate or when it was actually paid. If this was helpful please press the Accept button. Thank youCustomer and let me know if you have more questions. I do hope that you are successful in your attempts at getting this removed, and would be interested to hear the eventual outcome.
Accountant
25+ years tax consulting. Specializing in returns for US citizens living abroad