New IRS Policy 04/02/2011

[Mervynsb]

New IRS Policy Makes Tax Liens Less Taxing

Friday, March 11 2011

 

Last year I wrote about how the IRS policy on filing tax liens unfairly hurts taxpayers and small business owners. Tax liens are truly a double whammy. Not only do you owe the IRS (which is bad enough) but you may also find your credit destroyed for years by a tax lien on your credit reports.

 

This time, I have good news: the IRS is implementing new policies that ease up on tax liens. This can make a tremendous difference for millions of Americans.

 

Before this change, if you got a bill from the IRS saying you owed $5000 or more and couldn’t come up with the money to pay it right away, the IRS would file a Notice of Federal Tax Lien which would then be picked up by the major credit reporting agencies and appear on your credit reports. A tax lien can drop your FICO credit scores by as much as 200 points, and could result in your current lenders closing your lines of credit or credit cards. Even worse, under the Fair Credit Reporting Act (which applies to personal credit reports, not business credit reports), they remain on credit reports for seven years after they are paid or satisfied.

 

In short, tax liens are really, really bad.

 

Nina E. Olson, the Taxpayer Advocate, has repeatedly criticized this policy in her reports to Congress, and warned that there is no evidence that tax liens help the IRS collect past due taxes. In fact, they may hamper IRS collection efforts by destroying credit ratings and making it impossible to credit to pay off the tax debt. Someone must have been listening.

 

Under guidelines recently announced by the IRS, there will be new options for avoiding tax liens and for getting them removed once the debt is paid.

 

Higher threshold: The IRS has raised the threshold for filing tax liens from $5000 to $10,000, and that figure will be reviewed again in a year. That means the IRS will not automatically file a lien if you owe less than $10,000.

 

Removing liens: Once you’ve paid your tax debt in full, you can request that the lien be removed. This wipes the slate clean on that problem, and allows you to rebuild credit. (It remains to be seen how easy the process will be, but I’ll try to remain optimistic for the moment.)

 

You may not even have to pay off the tax debt to have the lien removed. If you owe $25,000 or less and enroll in a Direct Debit Installment Agreement (so that your installment payments are taken out of your bank account each month), you can ask for the tax lien to be removed. The IRS make sure they successfully collect a few payments first, but once you're over that hurdle, you can request the lien removal. If you are already on an installment agreement, you can ask to convert to a Direct Debit Installment Agreement to take advantage of this initiative.

 

And here’s a change aimed squarely at small businesses: Those who owe the IRS $25,000 or less (up from $10,000 previously) can participated in a Streamlined Installment Agreement, as long as they can pay off the tax they owe in two years or less. The benefit to the streamlined agreement is that it doesn’t require a financial statement. If you want to go this route, you must enroll in a Direct Debit Installment Agreement.

 

Finally, the IRS says it will offer a new “streamlined Offer in Compromise (OIC) program.” An offer-in-compromise is a basically a settlement that allows you to pay less than the full amount you owe. You won't be eligible for one if the IRS believes you can pay the full amount in a lump sum or through a payment agreement. But if you qualify, the new program allows taxpayers who earn up to $100,000 annually to resolve a tax bill of $50,000 or less through an OIC.

 

Olson doesn't seem to be completely enamored with these changes. The says these programs don’t go far enough, and she certainly knows better than I do the challenges facing taxpayers. I hope these new policies make a signifant difference. Until I see otherwise, I am relieved that taxpayers have at least a fighting chance to get tax liens off their credit reports and rebuild their credit.

 

 

 

Just wanted to share the Knowledge

 

Dean R

Edited April 5, 2011 by Mervynsb

[wow]

Good news...but pls change your font

[Mervynsb]

Good news...but pls change your font

yeah im so sorry is this any better this is such good news ....

[wow]

Good news...but pls change your font

yeah im so sorry is this any better this is such good news ....

 

 

Much...thank you

[uncoder2010]

This is such great news for millions of Americans and seems to be the fair thing to do.

[Mervynsb]

This is such great news for millions of Americans and seems to be the fair thing to do.

 

 

Can you pass the word around to everyone you know .. I did a posting on my job letting everyone know about it ...Lets get everyone on this

 

God Bless

 

Dean R

[Momof5]

Now we all need advocates at the State level so that states follow suit!

[TexasinATL]

Agree. Come on, GA!

[Jen23514]

Agree. Come on, GA!

 

Have you written your AG and state reps yet and expressed your desire to have a similar law on the books?

[Mervynsb]

Can someone be so kind as to create a sample letter or guidelines at to how we can write a letter to have the CRA to have the liens removed once paid from file ...

 

 

Many thanks

[Mervynsb]

Has anyone had any luck on having the liens removed I sent out some removal letters about 3 days ago waiting to see their response

 

Dean R

[TexasinATL]

What did you say in your letters? Was it for IRS or for state?

[ericgunit]

Has anyone looked up an official source of where you can reference this? Could probably use that to create an effective letter. Man I wish the States follow this. I have two released liens from 5 years ago when I was traveling extensively for work. I lived in 4 different States in one year and made some errors when I filed my taxes. 2 of the States came back at me hard and although it was an innocent mistake, I had to pay some small penalties but the course they took of reporting it on my credit killed me.

Edited April 22, 2011 by ericgunit

[ADT]

Ericgunit is right. We need some point of reference in order to write an effective letter

[Mervynsb]

I actually wrote the credit bureau and attached a copy of the article

[montanarice]

OK folks, here's all the dirt and lowdown & forms on this subject.........I had a federal lien in Feb. 2009 for $5,400 thanks to a business partner who skipped out on filing taxes on me.....paid it off in full by March 2010 and got certificate saying it was paid off as such but it started reporting on all 3 of my CRA reports and my credit scores plummeted.

 

I just sent out a letter to the IRS early March 2011 and it is now COMPLETELY gone off all three of my April CRA reports and my score jumped 106 points across the board. Here's what worked for me:

 

1. First, for reference, here's the link to the official IRS Newsroom Press Release on the subject: http://www.irs.gov/newsroom/article/0,,id=236540,00.html

 

2. Second and most importantly, DO NOT INITIALLY WRITE DISPUTE LETTERS TO THE CRA'S, YOU HAVE TO CONTACT THE IRS AND THEY WILL REMOVE IT..........from the press release: "Liens will now be withdrawn once full payment of taxes is made if the taxpayer requests it. The IRS has determined that this approach is in the best interest of the government.In order to speed the withdrawal process, the IRS will also streamline its internal procedures to allow collection personnel to withdraw the liens."

 

3. What you have to do first is fill out an IRS form 12277: Application for Withdrawl of Filed Form 668(Y), notice of Federal Tax Lien. Here's the PDF link: http://www.irs.gov/pub/irs-pdf/f12277.pdf

 

4. There are four boxes on the bottom of the form and you have to check off one. Chedck off "D" : The taxpayer or the taxpayer advocate acting on behalf of the taxpayer, believes withdrawl is in the best interest of the taxpayer and the government".

 

5. To speed things up, it may help if you include a copy of your certificate of release from when you paid off your taxes (I did, I know they have access to it all, just tried to save them some paperwork tracking).

 

6. You HAVE to send it to the proper Technical Services Advisory Group Manager address: Here's a link to the pdf that, on page 2, shows the correct mail addresses for every region of the country: http://www.irs.gov/pub/irs-pdf/p4235.pdf

 

7. As far as sample letter, mine was pretty simple and to the point, I figured it wasn't like I was trying to do a pay to delete, I'm just taking them up on their offer so it was quick and to the point. THE MOST IMPORTANT PART of your letter other than making sure all of your dates and ss#/taxpayer is that YOU have to request for them to send withdrawl copies to the CRA's, they won't just do it on their own:

 

 

March 4, 2011

 

IRS

Technical Services Advisory Group Manager

15 New Sudbury Street,

JFK Building, Rm. 800,

PO Box 9112,

Stop 20800A, Boston, MA 02203

 

 

To Whom It May Concern,

 

 

Attached please find my completed and signed request for withdrawl of tax lien, serial number xxxxxxxxxxxx for the taxpayer ID (Social Security Number) xxxxxxxxxxx. Original Date of Asssesment was xx/xx/2009 for tax period ending xx/xx/xxxx.

 

Attached also please find a copy of a notice from the IRS Newsroom dated 2/24/2011 in relation the the IRS's new policy to withdraw paid tax liens. I wish to particpate in this offer and program effective immediately.

 

Enclosed, please find my completed IRS Form 12277 and a copy of my certificate for my paid tax lien.

 

Once reviewed and approved, please forward information of the withdrawl and deletion from my personal credit file to the following credit reporting agencies:

 

TransUnion

P.O. Box 2000

Chester, PA 19022-2000

 

Equifax Information Services

P.O. Box 740256

Atlanta, GA 30374

 

Experian

P.O. Box 9556

Allen, TX 75013

 

Please feel free to cntact me if any further information is required to expedite this request. finally, please forward me a copy of the offical withdrawl notice when it is completed for my records.

 

Thank you in advance for all of your assitance and efforts.

 

Sincerely,

 

 

Name

Address

Contact phone number

Edited April 25, 2011 by montanarice

[DAR77]

in refrence to a above questing, i send it the form, and i got a withdrall letter. it too about 2 weeks. !

[Mervynsb]

Many thanks this has been so helpful I will be mailing out my forms today . I'll let everyone know how it goes..

 

Thanks yet again

 

Dean ®

[ericgunit]

OK folks, here's all the dirt and lowdown & forms on this subject.........I had a federal lien in Feb. 2009 for $5,400 thanks to a business partner who skipped out on filing taxes on me.....paid it off in full by March 2010 and got certificate saying it was paid off as such but it started reporting on all 3 of my CRA reports and my credit scores plummeted.

 

I just sent out a letter to the IRS early March 2011 and it is now COMPLETELY gone off all three of my April CRA reports and my score jumped 106 points across the board. Here's what worked for me:

 

1. First, for reference, here's the link to the official IRS Newsroom Press Release on the subject: http://www.irs.gov/newsroom/article/0,,id=236540,00.html

 

2. Second and most importantly, DO NOT INITIALLY WRITE DISPUTE LETTERS TO THE CRA'S, YOU HAVE TO CONTACT THE IRS AND THEY WILL REMOVE IT..........from the press release: "Liens will now be withdrawn once full payment of taxes is made if the taxpayer requests it. The IRS has determined that this approach is in the best interest of the government.In order to speed the withdrawal process, the IRS will also streamline its internal procedures to allow collection personnel to withdraw the liens."

 

3. What you have to do first is fill out an IRS form 12277: Application for Withdrawl of Filed Form 668(Y), notice of Federal Tax Lien. Here's the PDF link: http://www.irs.gov/pub/irs-pdf/f12277.pdf

 

4. There are four boxes on the bottom of the form and you have to check off one. Chedck off "D" : The taxpayer or the taxpayer advocate acting on behalf of the taxpayer, believes withdrawl is in the best interest of the taxpayer and the government".

 

5. To speed things up, it may help if you include a copy of your certificate of release from when you paid off your taxes (I did, I know they have access to it all, just tried to save them some paperwork tracking).

 

6. You HAVE to send it to the proper Technical Services Advisory Group Manager address: Here's a link to the pdf that, on page 2, shows the correct mail addresses for every region of the country: http://www.irs.gov/pub/irs-pdf/p4235.pdf

 

7. As far as sample letter, mine was pretty simple and to the point, I figured it wasn't like I was trying to do a pay to delete, I'm just taking them up on their offer so it was quick and to the point. THE MOST IMPORTANT PART of your letter other than making sure all of your dates and ss#/taxpayer is that YOU have to request for them to send withdrawl copies to the CRA's, they won't just do it on their own:

 

 

March 4, 2011

 

IRS

Technical Services Advisory Group Manager

15 New Sudbury Street,

JFK Building, Rm. 800,

PO Box 9112,

Stop 20800A, Boston, MA 02203

 

 

To Whom It May Concern,

 

 

Attached please find my completed and signed request for withdrawl of tax lien, serial number xxxxxxxxxxxx for the taxpayer ID (Social Security Number) xxxxxxxxxxx. Original Date of Asssesment was xx/xx/2009 for tax period ending xx/xx/xxxx.

 

Attached also please find a copy of a notice from the IRS Newsroom dated 2/24/2011 in relation the the IRS's new policy to withdraw paid tax liens. I wish to particpate in this offer and program effective immediately.

 

Enclosed, please find my completed IRS Form 12277 and a copy of my certificate for my paid tax lien.

 

Once reviewed and approved, please forward information of the withdrawl and deletion from my personal credit file to the following credit reporting agencies:

 

TransUnion

P.O. Box 2000

Chester, PA 19022-2000

 

Equifax Information Services

P.O. Box 740256

Atlanta, GA 30374

 

Experian

P.O. Box 9556

Allen, TX 75013

 

Please feel free to cntact me if any further information is required to expedite this request. finally, please forward me a copy of the offical withdrawl notice when it is completed for my records.

 

Thank you in advance for all of your assitance and efforts.

 

Sincerely,

 

 

Name

Address

Contact phone number

 

Thanks for researching and posting all of this information. This will be helpful to many people out there.

Edited April 25, 2011 by ericgunit

[The Livid One]

A concise how-to...very well written....perhaps this should be stickied..?

 

Thanks for posting this info..!! :good:

[proxyman01]

Can you tell me if I would be allowed to participate in this program for my paid tax liens if I have other non-paid liens outstanding?

[montanarice]

yes they usually treat each tax lien as seperate entities, ............as each one gets paid off you would just repeat the process, once 1 lien is paid it would have no bearing on any other liens due, you still get your release certificate for that one.......

 

If you have several outstanding tax liens, you may want to apply (or reapply) for an Offer in Compromise, as they have also changes the guidelines for these too, and you may be able to lump them all together, set up a plan, and al least reduce the number of liens reporting on your credit reports:

 

"Offers in Compromise

 

The IRS is also expanding a new streamlined Offer in Compromise (OIC) program to cover a larger group of struggling taxpayers.

 

This streamlined OIC is being expanded to allow taxpayers with annual incomes up to $100,000 to participate. In addition, participants must have tax liability of less than $50,000, doubling the current limit of $25,000 or less. OICs are subject to acceptance based on legal requirements. An offer-in-compromise is an agreement between a taxpayer and the IRS that settles the taxpayers tax liabilities for less than the full amount owed. Generally, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayers income and assets to pay."

Edited April 25, 2011 by montanarice

[Mervynsb]

Hats off to you I used your guidelines and made it a little more personal to my situation ..

 

away away in the mail

 

Many thanks again

 

Dean ®

[proxyman01]

That is great information. Thanks so much for your guidance!

[Mervynsb]

Here goes the IRS called me today left me a voice mail to call back on monday 2nd May 2011

 

The message states they pulled my file and shows no liens or anything pending on my social security or any accounts thereof

 

 

They say they want to talk to me to get to the bottom of this ....

 

 

 

My question is once this is verified on Monday

 

who can i sue for placing this on my record what are the procedures its been on my record since 2008

 

thanks freinds

 

I can see the light at the nearing end of the tunnel

 

God Bless

 

Pay it forward

 

Many thanks

 

Dean ®