Since the Fresh Start Initiative began, I have successfully helped more than 200 clients completely remove tax liens from their report. By following these five simple steps, you can, too.
1. Locate your state IRS field collection office. IRS Publication 4235 lists the 34 IRS field collection locations that handle lien withdrawals for the entire U.S., along with their address, phone number and fax number. Make a note of the contact information in your area. This is where you will be sending forms or asking any questions you might have.
2. Search the Internet for IRS Form 12277. Then print it out. If you have more than one tax lien on your report that is eligible for removal, you will need a Form 12277 for each lien you want withdrawn. Boxes 1 through 8 on the form ask for your name and basic identification information.
For the remaining questions, you will need to extract information from the original notice that the IRS filed against you, called the "Notice of Federal Tax Lien/Form 668(Y)". This would include the serial number of the tax lien, the date the notice was filed and the recording office in which the notice was filed. Then check the appropriate answer on Box 10. Skip Section 11, and then in Section 12, you should state something like the following:
Section 12 (IRS Form 12277): "I have accomplished the requirements necessary to obtain a tax lien withdrawal. I have paid all past due taxes, and I am now current on all of my taxes. Therefore, according to IRS policy, I am requesting a lien withdrawal."
Sign and date the form.
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3. Call the IRS office you located in Step 1 to handle your request. Get a name, confirm the fax number, and let them know you will be faxing a Form 12277. I recommend you ask how long after you fax in the form that you should wait to call to confirm they have received it. The turnaround time is about 30 days, plus mail time. If at that time you have not received a letter confirming the lien withdrawal(s), follow up with another call.
4. Contact the three credit bureaus. Go to each of their websites—Experian.com, Equifax.com and Transunion.com—and follow their specific step-by-step instructions for submitting the withdrawal(s). Be sure to print all of your confirmations. Within 30 days you should receive updated credit reports from each of the three credit bureaus.
5. Check each report to ensure that the tax lien(s) were expunged. If any of the three bureaus did not remove the lien(s), you will need to contact the bureau and be tenacious until it is removed.
Depending on how many liens you have and the date the lien(s) were filed and some other variables, your credit score will increase immediately—and in many cases it will be significant.
—By Diana Nichols, president of Gold Key Consulting. Gold Key Consulting is a credit management firm in Fairfield, Connecticut