How to Remove a Tax Lien from Your Property

Table Of Contents

How Does Tax Lien Removal Work?

Tax lien removal works through specific legal and administrative processes. A tax lien represents a legal claim against your property by a taxing authority. Tax lien removal requires direct action to address the underlying tax debt. You must satisfy the tax debt to initiate the removal process.
Satisfying the tax debt typically involves full payment of the outstanding taxes, penalties, and interest. Another option for tax lien removal involves negotiating a settlement with the taxing authority. The settlement may include an Offer in Compromise. A tax resolution lawyer assists with these complex negotiations.

What Is a Tax Lien Discharge?

A tax lien discharge is the release of a specific piece of property from a tax lien. A tax lien discharge allows the transfer of clear title to a buyer. A tax lien discharge does not eliminate the underlying tax debt. The tax debt remains enforceable against your other assets.
You can request a tax lien discharge when selling property. The proceeds from the property sale typically satisfy the tax lien. The taxing authority reviews the request for discharge. The taxing authority issues a certificate of discharge upon approval. This certificate removes the lien from the specific property.

How Do I Get a Tax Lien Released?

You get a tax lien released by satisfying the tax obligation completely. Full payment of the tax debt is the most straightforward method. The taxing authority then issues a Certificate of Release of Federal Tax Lien. This document formally removes the lien from public record.
Another way to get a tax lien released involves demonstrating financial hardship. You can apply for a tax lien withdrawal under specific circumstances. A tax lien withdrawal removes the public notice of the lien. The underlying tax liability still exists with a tax lien withdrawal. You must continue to resolve the tax debt after a tax lien withdrawal.

What is the Process for Tax Lien Withdrawal?

The process for tax lien withdrawal begins with a formal request to the taxing authority. You must meet specific criteria for a tax lien withdrawal. These criteria include payment of the tax liability. The tax lien withdrawal also requires the taxing authority to determine a withdrawal is in the best interest of the government.
You submit Form 12277, Application for Withdrawal of Filed Federal Tax Lien. This form details the reasons for the withdrawal request. The taxing authority reviews the application. The taxing authority then decides whether to grant the tax lien withdrawal.

What is a Tax Lien Subordination?

A tax lien subordination means the taxing authority agrees to let other creditors have priority. A tax lien subordination does not remove the tax lien. The tax lien subordination changes the lien's position in the payment hierarchy. This is often necessary for property owners seeking refinancing.
The taxing authority assesses the impact of a tax lien subordination on its ability to collect the tax debt. A tax lien subordination allows a property owner to obtain a loan. The new loan typically has a higher priority than the existing tax lien. The property owner must submit a formal request for tax lien subordination.

When Is a Tax Lien Subordination Useful?

A tax lien subordination is useful when a property owner needs to refinance a mortgage. A new lender often requires a first lien position on the property. The tax lien subordination allows the new mortgage to take priority. This enables the property owner to secure new financing.
A tax lien subordination also proves useful for selling property. A buyer's lender may require a clear title or a first lien position. The tax lien subordination facilitates the sale. The taxing authority approves the tax lien subordination if it believes the tax debt will still be paid.

FAQS

How do I challenge an incorrect tax lien?

You challenge an incorrect tax lien by filing an appeal with the taxing authority. You must provide evidence demonstrating the tax lien is incorrect. A tax resolution lawyer assists with gathering documentation and presenting the appeal.

Can a tax lien prevent me from selling my property?

A tax lien can prevent you from selling your property with a clear title. The tax lien attaches to the property. The buyer's lender typically requires the tax lien removal before closing the sale.

How long does a tax lien stay on my property?

A tax lien generally stays on your property for ten years. The taxing authority can refile the tax lien after ten years. This extends the period the tax lien remains active against the property.

What happens if I ignore a tax lien?

Ignoring a tax lien leads to serious consequences. The taxing authority can seize your property. The taxing authority can also levy your bank accounts or garnish your wages.

Does bankruptcy remove a tax lien?

Bankruptcy does not automatically remove a tax lien. A tax lien is a secured claim. Bankruptcy may discharge the underlying tax debt, but the tax lien remains on the property.

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