What is a Tax Lien?
A tax lien is a legal claim on your property as a penalty for unpaid taxes. It is one of the worst blemishes to have on your financial history, as it can significantly lower your credit score and prevent you from obtaining loans or even credit cards for over 7 years. Fortunately, there is now a quick and simple way to get a tax lien removed from your credit report.
How Do I Determine If I Qualify?
As a general rule, qualified individuals are those who,
- have paid off their tax debt and had their lien released;
- are in compliance with filing their personal and business tax returns for the last 3 years; and
- are current on their tax payments and federal tax deposits.
Individual qualifications can be found on the IRS website.
How Do I Apply to Have the Lien Withdrawn?
The following are the 5 steps in the federal tax lien and tax lien withdrawal process:
- Complete Form 12277, also known as the Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien. This form is available on the IRS website.
- Send your completed Form 12277 to the regional IRS office using certified mail. The contact information can be found on Publication 4235, also found on the website.
- Wait approximately 30-45 days for a response from the IRS, stating that they have notified the courthouse (where the original lien was filed) to withdraw it.
- Dispute the lien with local credit reporting agencies. They will receive a confirmation of the withdrawal from the courthouse, enabling a quick removal.
- Each credit reporting agency will notify whether the lien removal took place. If not, you can file a follow-up dispute and include the withdrawal notification from the IRS.
Will It Help My Credit Scores?
Most individuals who have had a tax lien withdrawn have seen an increase in their credit scores, although this greatly depends on the age of the lien, the ability to rebuild positive credit, and more. However, eliminating a lien can aid in a positive response to your next loan or credit card application.
The ideal solution is to review your credit score prior to filing for lien withdrawal and proceed to monitor it once the lien is removed.
How Long Does It Take for a Tax Lien to Be Removed from My Credit Report?
With the tax lien withdrawal, you can have the lien removed from your credit report in under 2 months. Needless to say, this is significantly lower than the original 7 years that you were faced with, which is highly beneficial in helping resolve your financial woes.
Contact Sheppard Law Offices Today
Attempting to get a tax lien removed and improving your credit scores is not easy, and hence working with a qualified attorney can take the stress out of the situation. Attorney Kenneth L. Sheppard, Jr. and the team from Sheppard Law Offices are here to address any of your questions or concerns. Call us today!