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Tax.appeal.168
Tax.appeal.168, Tax Accountant
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I have tax liens from 2010 that are unpaid. I have reached a

Customer Question

I have tax liens from 2010 that are unpaid. I have reached a settlement with the IRS for paying my back taxes. I now live in a new state. How can I get the liens resolved/removed since I have a payment plan that takes all my cash.
Submitted: 11 months ago.
Category: Tax
Expert:  Tax.appeal.168 replied 11 months ago.

As you are on a payment plan, if you have not defaulted, you may be able to request that the IRS withdraw the lien by completing a Form 12277. SEE BELOW:

How to Get Rid of a Lien

Paying your tax debt - in full - is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after you have paid your tax debt.

When conditions are in the best interest of both the government and the taxpayer, other options for reducing the impact of a lien exist.

Discharge of property

A "discharge" removes the lien from specific property. There are several Internal Revenue Code (IRC) provisions that determine eligibility. For more information, refer to Publication 783, Instructions on How to Apply for Certificate of Discharge From Federal Tax Lien (PDF) and the video Selling or Refinancing when there is an IRS Lien.

Subordination

"Subordination" does not remove the lien, but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage. To determine eligibility, refer to Publication 784, Instructions on How to Apply for a Certificate of Subordination of Federal Tax Lien (PDF) and the video Selling or Refinancing when there is an IRS Lien.

Withdrawal

A "withdrawal" removes the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property; however, you are still liable for the amount due. For eligibility, refer to Form 12277, Application for the Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien (Internal Revenue Code Section 6323(j)) (PDF) and the video Lien Notice Withdrawal.

Two additional Withdrawal options resulted from the Commissioner’s 2011 Fresh Start initiative.

One option may allow withdrawal of your Notice of Federal Tax Lien after the lien’s release. General eligibility includes:

Your tax liability has been satisfied and your lien has been released; and also:

The other option may allow withdrawal of your Notice of Federal Tax Lien if you have entered in or converted your regular installment agreement to a Direct Debit installment agreement. General eligibility includes:

  • You are a qualifying taxpayer (i.e. individuals, businesses with income tax liability only, and out of business entities with any type of tax debt)
  • You owe $25,000 or less (If you owe more than $25,000, you may pay down the balance to $25,000 prior to requesting withdrawal of the Notice of Federal Tax Lien)
  • Your Direct Debit Installment Agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is earlier
  • You are in full compliance with other filing and payment requirements
  • You have made three consecutive direct debit payments
  • You can’t have defaulted on your current, or any previous, Direct Debit Installment agreement.

REFERENCE SOURCE:

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Understanding-a-Federal-Tax-Lien#Rid

Link to Form 12277:

https://www.irs.gov/pub/irs-pdf/f12277.pdf

Let me know if I can be of further assistance to you regarding this matter.

Customer: replied 11 months ago.
The liens are state. Separate from my irs lien
Expert:  Tax.appeal.168 replied 11 months ago.

What state?

Customer: replied 11 months ago.
Kansas
Expert:  Tax.appeal.168 replied 11 months ago.

Contact the Kansas Dept. of Revenue to verify the balance of the taxes owed. SEE BELOW:

Contact your state tax office to confirm the outstanding balance. Use this opportunity to establish a repayment plan or pay the debt in full. Do not settle the debt for less than is owed, as this will further damage your credit and prohibit you from removing the lien. Get any repayment agreement in writing.

Pay the debt, either with a lump-sum payment or through a repayment plan. Save all documents related to the repayment of the lien. Ask your state tax office for a paid-in-full letter once the debt is repaid. You will need these documents to make a case for removal.

Write a goodwill letter to all credit bureaus reporting the state tax lien. Lien removal is not guaranteed, but the best way to try is to honestly address the failure to pay taxes and your attempt to correct your financial mistakes. Use the letter to discuss all problems leading up to the delinquency and the steps you have taken to get back on track. Write with passion, as appeals are reviewed on a case by case basis. Ask for compassion and empathy.

Include all documents related to the delinquency with the goodwill letter. This can include disability award letters, letters from your doctor, unemployment checks or medical bills, among other information.

Send the goodwill letter to all credit bureaus reporting the lien. Include all supporting documents (see Resources for addresses). Keep a copy of the letter for your records.

Other than the above, there doesn't seem like much else that you can do to get the state to remove the liens.

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