Lien Withdrawn Permanent Public Record?

[cdbonds624]

Does anyone have any experience getting a Withdrawn and Released IRS tax lien removed from public record?

 

I was told that once these are a matter of public record, they are permanent and the CR bureaus have different policies on reporting these withdrawn liens. I have heard of public records being expunged but would like some advice on the process.

[SomeGuyInCA]

They do not have different policies - they appear to have uneven enforcement internally and they appear to continually goof up in terms of honoring their requirements according to federal law.

 

Here is the synopsis as it pertains to you: A withdrawal pertains to a notice of federal tax lien that has been nullified by the IRS. Only one 'policy' can legally apply to such liens, and that is what federal law says. Federal law says that a CRA cannot report information that is inaccurate. Reporting a lien when the original notice of that lien was nullified is inaccurate by definition, since in a legal sense the original notice, which is the basis of their reporting, does not exist. Without such a notice, there is no basis upon which something could be reported.

 

I just posted this in another thread - it is germane here:

 

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This question has been coming up a lot lately, so just let me make a few observations.

First, let's be clear for everyone's sake about what exactly and IRS withdrawal is. When the IRS files a lien against someone, they file a notice of federal tax lien with the recorder of the county where the person resides. When the IRS files a withdrawal, the document is actually a withdrawal of notice of filed federal tax lien. That is a very important distinction to make. What the IRS is doing is saying they 'take back' the original notice of the lien. And, because that notice is the sole basis upon which a lien is reported in the public record, the essential fallout is that the entire PR is nullified. Imagine it this way: the IRS is 'going back in time' and eliminating the original notice of tax lien. By doing that, the IRS is eliminating any legal basis any CRA may have for reporting the public record. When a CRA refuses to remove a lien PR for a lien that was withdrawn, they are breaking the law.

Second, you have to understand what recorders do. When they receive a document, they file it. So, when they receive a notice of a lien, they will file it. When they receive a notice of a withdrawal, they will file it. They typically do not go back and remove the original filed document. So if you go to your recorder's office, you will likely find that both the original PR and the following withdrawal are BOTH filed and are both in the public record. This is just part of the nature of how these organizations work, and from a legal and reporting standpoint it is largely irrelevant. It becomes very relevant, however, when you are trying to get a CRA to delete a PR for a withdrawn lien.

CRA's are generally thought to have abysmal processing functionality for disputes; this is widely known and well established. What happens when you file your dispute is that any documents you give them will be scanned, your dispute will be reduced to a few digit code, and then it will eventually come before some hourly paid worker in an overseas processing location who will spend probably less than 5 minutes (probably much less) examining your dispute. They may not even look at the documentation you sent. What they will do is examine their database of records as provided to them by third parties. They may even query that third party data provider electronically. The likelihood that this provider will have any information about the withdrawal in their files is almost nil. The likelihood that the foreign, non-native english speaker processing your dispute will understand the distinction between the terms 'withdrawal', 'release', etc. is similarly low. All of this adds up to a high probability of error on the part of the CRA, even though you are in the right.

So here is what you need to do in order to reduce the likelihood of that error:

1) Obtain a certified copy of the withdrawal as filed with your county recorder. You can often obtain these online for a very minimal fee. The certified or official copy will likely bear the seal and the signature of the recorder, and it will have the document number under which the withdrawal is filed.

2) Draft a letter which clearly spells out, in simple terms, what you want. Bulleted points are best - I paraphrase:

- I have a lien that was withdrawn by the IRS.

- Withdrawal of a lien is distinct from release because it nullifies the original notice of lien.

- Because a withdrawal nullifies the original record of a lien, there is no permissible basis for your organization to be reporting the lien.

- I therefore demand that you delete your reporting of this lien immediately, pursuant to your requirements under applicable federal and state law.

- I am providing you a certified copy of the lien withdrawal as filed with the <county>, <state> recorder. It can be accessed with that office under document number <the number>.

3) Send your letter and the certified copy CMRRR.

Essentially what you are doing is providing them with irrefutable evidence that they are wrong. Even having done so, they may still blow you off, at which point you need to take this same documentation and file a complaint with the CFPB.

[SomeGuyInCA]

Out of curiosity, who told you these are a matter of public record and are permanent? Whoever they are, they don't know what they are talking about. Technically they are correct in that a filed notice of a lien may still exist in the recorder's files. That does not mean, however, that the CRA's are allowed by law to report such records. They are obliged to report accurately, and accuracy implies considering current state. Current state for a withdrawn lien is that the original notice is 'withdrawn' by the original claimant, which is the legal equivalent of saying 'we never filed a lien in the first place.' So, even though the original notice might still be on file somewhere, that does not mean the CRA has a legal right to report it, nor does it mean that the original document carries any legal weight.

 

The same is true of many types public records, FYI. If you buy a house, for example, there will be a record of your purchase filed. But if you later sell the house, the presence of the purchase in the records does not mean you can legally be considered the owner of the house. The record of your purchase still exists, but you cannot be considered the owner of record because there is a subsequent sale that is recorded. Imagine someone trying to argue that they could consider you liable for a property because there is a document remaining on file saying you bought the house... and they just ignore the fact that there is a later document that says you subsequently sold it. That's absurd, obviously, and they cannot legally make such a claim stick, even though technically it is true that there is a document on file which says you are the owner. When someone suggests that they can report a withdrawn lien because the original notice remains filed, they are making the same sort of absurd legal argument. It is complete bunk.

Edited May 6, 2013 by SomeGuyInCA

[cashnocredit]

CRA's can't report a withdrawn lien. Counties can and most do.