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My new wife has a federal tax lien from her ex-husband, but

Customer Question
paid her taxes and worked...
My new wife has a federal tax lien from her ex-husband, but paid her taxes and worked minimally when married to him. Her ex-husband incurred the tax lien for not paying his taxes. The tax lien shows up on her credit report and now mine because I guess were married. Is there any way to get this removed?
Submitted: 5 years ago.Category: Tax
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Answered in 24 minutes by:
6/2/2012
Tax Professional: Lev, Tax Advisor replied 5 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,150
Experience: Taxes, Immigration, Labor Relations
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Hi and welcome to Just Answer!

A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets. A federal tax lien exists after the IRS:

  • Assesses your liability;
  • Sends you a bill that explains how much you owe (Notice and Demand for Payment); and
  • You neglect or refuse to fully pay the debt in time.

The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.


How to Get Rid of a Lien? According to the IRS - 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.
Options: 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 — Allows property to be sold free of the lien. The seller or buyer can submit Publication 783, Instructions on How to Apply for Certificate of Discharge From Federal Tax Lien - http://www.irs.gov/pub/irs-pdf/p783.pdf.
-- 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. For more information review Publication 784, Instructions on How to Apply for a Certificate of Subordination of Federal Tax Lien - http://www.irs.gov/pub/irs-pdf/p784.pdf.
-- Withdrawal — Removes the public notice and assures that the IRS is not competing with other creditors for your property. If applying for a withdrawal, use Form 12277, Application for the Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien - http://www.irs.gov/pub/irs-pdf/f12277.pdf.

In additional - please be aware that the IRS may collect the tax liability only within ten years after assessment (statute of limitation on collection) - that means - if not paid - the lien will be removed after 10 years.

Even after the IRS releases the lien, it will be on the credit report as "released" for seven years.

Let me know if you need any help.

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Customer reply replied 5 years ago
When you wrote this: In addition - please be aware that the IRS may collect the tax liability only within ten years after assessment (statute of limitation on collection) - that means - if not paid - the lien will be removed after 10 years.

Even after the IRS releases the lien, it will be on the credit report as "released" for seven years.

 

1. Does that mean the money does not have to be paid back; if its removed after ten years, but will still be on the credit report for another 7 years?

Tax Professional: Robin D., Senior Tax Advisor 4 replied 5 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,887
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello,

Not exactly. There is a statute of limitations for collections and that is 10 years but a lien can last for 20 years and once placed is active unless removed. The IRS can also renew the lien before it actually expires. In short once a lien is placed until the debt is satisfied the lien can be renewed.

The judgment lien is effective, unless satisfied, for 20 years. Upon court approval, the judgment lien may be renewed for one additional period of 20 years by filing a notice of renewal. 28 USC § 3201.

If the tax debt were paid by her previous spouse then the lien would be released and removed from the reporting but the credit bureau would show it for 7 years as having been Released.
The statute of limitations for collection is found in IRC § 6502. IRC §§ 6502 and 6503 for lists of events which suspend (really prolong) the normal limitation periods.

 

Robin D.
Robin D., Senior Tax Advisor 4
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Satisfied Customers: 15,887
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