Tax liens are devastating. Discover the secrets to getting rid of a tax lien, even if you have not fully paid off your taxes.
For decades, the general rule has been that a lien would not be released until you paid off your taxes in full, period. However, in February, 2011 the IRS announced a higher threshold of liability for when it will file a lien. With that program, the IRS has also announced a way to get out of a levy, even if you have not fully paid off your liabilities.
If you owe less than $25,000 in total liabilities, you can apply for a withdrawal of the lien using IRS Form 12277. So long as you agree to pay off the rest of the liability by direct monthly debit, the lien will be withdrawn. After 3 months' record of these debited payments, the IRS will immediately withdraw the lien. A withdrawal (which is broader than a general release) is very beneficial because it immediately expunges the lien. In other words, it is as though it never existed in the first place! Moral of the story, if you have 3 months to plan for sale of an asset, get Form 12277 on file now.
In essence this new program acts as a $25,000 loan from the government without any evidence to third parties of the IRS' security or clouds on your title. Now, that's "change" you can believe in!