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How to Make Your Tax Lien Disappear

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A tax lien can be one of the worst items to appear on your credit report. It’s considered very negative and can cause your credit scores to drop significantly. Even worse, under federal law, unpaid tax liens can remain on credit reports indefinitely, though in practice credit bureaus may remove them after a decade or so. (Once paid and released, a tax lien must be removed seven years from the date it was filed.)

There is a way to make tax liens disappear from your credit reports completely, and quickly, though. Unfortunately, not all taxpayers who are dealing with this problem know about it.

A Notice of Federal Tax Lien — “NFTL” in IRS parlance and just “tax lien” to the rest of us — is a tool the IRS uses to let creditors and others know that it has an interest in your property because of tax debt you still owe. If you can’t pay your taxes, the IRS may file one of these (it’s automatic when the amount owed is $10,000 or more). When it does, it is typically picked up and reported by the major credit reporting agencies. Credit scoring models consider tax liens very negative, and they can have an effect on credit scores similar to bankruptcy or judgments.

The Taxpayer Advocate noted in its report to Congress that as of March 2013, the IRS had filed 307,842 NFTLs. (Figures reported are for the fiscal year.) While that’s a decline of 50% over the same period in 2011, it’s still a lot of people who have been affected. And, of course, the cumulative number of people with this problem is much higher.

What many people don’t know is that in 2011 and 2012, the IRS implemented something called the “Fresh Start” initiative, which is a series of procedures and policy changes directed toward taxpayers facing collection from the IRS.

One of the changes includes a policy that allows certain taxpayers to request that their tax liens be withdrawn, even before the underlying tax debt has been paid. Under this policy, a taxpayer can request the tax lien be withdrawn in certain circumstances that we’ll describe in a moment.

The Taxpayer Advocate reports that as of March 2013, the IRS issued 6,845 lien withdrawals, an increase of 18% over the same period in 2012. While that’s great news for the nearly 7,000 people who managed to get these taken care of, there are still far more who may qualify but aren’t aware of the program or don’t know how to take advantage of it.

I’ve seen firsthand how unaware people are of this policy. Not long ago, I reviewed the credit report of a friend who had two tax liens on his credit reports. Though he had paid them off a couple years prior, he had no idea he could request they be removed from his reports. Using the instructions in this article, he was successful in getting them off his reports.

Do you have a tax lien on your credit reports? Here’s how to take advantage of the Fresh Start initiative.

1. Determine If You Qualify

You can qualify to request your lien be withdrawn, if:

  • Your tax liability has been satisfied (you’ve paid what you owe) and your lien has been released;
  • You are in compliance for the past three years in filing your individual and business returns, and information returns (as applicable) and;
  • You are current on your estimated tax payments and federal tax deposits, as applicable.

Even if you haven’t paid the IRS what you owe, you may be able to qualify for this program if you currently owe $25,000 or less and have entered into a direct debit installment agreement where your payments to the IRS are taken from your bank account automatically. There are other requirements you’ll need to meet, including that you have made at least three direct debit installment payments successfully and that you have not defaulted on a previous installment agreement. The IRS has the full list of qualifications.

2. Apply to Have The Lien Withdrawn

If you believe you qualify, fill out IRS Form 12277, Application for Withdrawal. It’s a fairly simple one-page form, with one page of instructions. Complete it and send it to the IRS per their instructions. If the IRS approves your request, it says it “will file Form 10916(c), Withdrawal of Filed Notice of Federal Tax Lien, in the recording office where the original NFTL was filed and provide you a copy of the document for your records.” This means you will have a written record that the lien has been withdrawn.

You can ask the IRS to then notify the credit reporting agencies of the withdrawal, or you can supply that notice to them yourself. Once the credit reporting agencies process your request, the lien will be withdrawn and your credit report and scores will treat it as if it never existed.

Note that this is not a process you need to pay a credit repair firm to do on your behalf; it’s something you can handle on your own. If you normally work with a tax professional, you may ask them to help, but even that may not be necessary in most situations.

Will It Help My Credit Scores?

Getting a negative item like this one removed from your credit reports will often help your credit scores. But how much will your credit scores change when the tax lien is withdrawn? It depends on a number of factors, including how old the lien is and what other type of information is in your reports. For that reason, it would be smart to review your credit score before the lien is removed and then continue to monitor it after the fact. You can do this for free using Credit.com’s Credit Report Card.

Some consumers have complained that getting negative items off their credit didn’t help their scores. When that happens, it’s often because the information that was removed was very old or they haven’t been able to establish positive credit references to rebuild credit. Still, the fact that there are no liens reported can be helpful when applying for another loan such as a mortgage.

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  • Ann

    I went through the process and have a signed 10916 form (the lien was paid over 6 years ago). I have sent it to all 3 of the credit reporting agencies and Transunion responded as ‘release of tax lien verified, no change’. They don’t seem to be recognizing that this allows it to be withdrawn. Do you have any advice for me? Thanks

    • http://www.Credit.com/ Gerri Detweiler

      Hmmm…can you get a copy of your TransUnion report to see if it has been removed? Or you can try calling them if you already have a copy of your report. If they still haven’t removed it I would suggest you file a complaint with the Consumer Financial Protection Bureau.

  • http://www.Credit.com/ Gerri Detweiler

    You will need to check with your state taxing authority to see if there a similar program. Even if there is not you still should make sure that the release of lien (or whatever it is called in your state) has been filed so that it shows as paid on your credit reports. That way the state liens can’t be reported for more than 7 years from the date they were entered by the court.

  • http://www.Credit.com/ Gerri Detweiler

    That’s fabulous! Thank you for sharing this. Do monitor your credit scores – you will probably see improvement. Here’s how to get your free credit score.

  • http://www.Credit.com/ Gerri Detweiler

    If you qualify, you can request the lien be removed immediately if you qualify. If you don’t, then it sounds like it will come off your reports on 12/17. Reaching an offer in compromise shouldn’t extend the reporting period.

  • http://www.Credit.com/ Gerri Detweiler

    You’ll need to talk with a local real estate attorney to clear this up. Perhaps there is a mistake.

  • http://www.Credit.com/ Gerri Detweiler

    Unpaid tax liens may be reported indefinitely. In terms of your comments about the qualifications, filing your taxes for the last three years is not the only requirement. You must be making payments or have resolved the debt. I’d suggest you read the instructions for Form 12277 and talk with a tax professional about your options for resolving this tax lien.

  • Renard Pongrac

    I have a question and am hoping someone can help and assist me and it would be much appreciated. First of all I was an actual victim of identity theft and I was taken to the cleaners for almost everything. I had learned that there are 3 federal tax liens on my credit reports and I have disputed these multiple times with all the credit bureaus however they refuse to remove them from my credit files. I sent them all the official documentation regarding the police reports and all the other legal stuff as well, but again will not take them off. The thing here is these 3 federal tax liens are equally to over one million dollars and I never have earned that amount of salary or money in my entire life. The rest of my credit is good and my bills, credit cards, auto loans are all paid on time each and every time every month, but with these 3 federal tax liens on my credit reports I can not get my credit score above 600 and any time I need or want any financing the bank wants 40-50% down before they will approve it. Again, if anyone here can assist or help me out here with this it would be deeply appreciated and thank you for taking the time to read my current issues and problems I am having with my credit. Regards and thank you.

    • http://www.Credit.com/ Gerri Detweiler

      Have you talked with a consumer law attorney? You may have a case for credit damage and may be entitled to damages as a result. You can look for a consumer law attorney with experience in FCRA issues at the website of the National Association of Consumer Advocates website.

  • jc

    Hi, although I received notice of WITHDRAWAL TAX LIEN Form 10916 (c) from IRS April 2011, the Liens continue to show on my credit report. This is killing my credit. I have contacted IRS and requested help, as well as Manhattan, Office of Register. I was advised the Liens should have dropped off anyway (date back to 2000-2001). And yet, there they are, staring me and potential creditors in the face. It does no good to show the WITHDRAWAL FORMS to “potential creditors”, I have tried. I desperately NEED a car. Please, can someone help?

    • http://www.Credit.com/ Gerri Detweiler

      jc – Did you dispute these liens on your credit reports directly with the credit reporting agencies and supply the copies of these letters? If you did and they were not removed then I’d suggest you either file a complaint with the CFPB or talk with a consumer law attorney as you may have a case for credit damage.

  • Mary

    My husband and I have property tax liens on our credit reports. I have heard that the IRS offers a program where the lien can be pulled. We have paid the liens and they were placed prematurely by our local government tax commissioner. What can we do?

    • http://www.Credit.com/ Gerri Detweiler

      Generally tax liens can be reported for ten years from the date they are paid. The federal Fresh Start program applies to liens filed by the IRS. For ones filed by a state or local taxing authority you need to check with them to see if they offer something similar. As for your statement “placed prematurely” I am not sure what you mean but if the lien should have never been filed at all then you’ll need to talk with the agency that placed the lien and/or the court. Disputing public record information is particularly thorny because if the data is still in the public record it will be confirmed when you dispute it.

  • E.T.

    I have an unpaid unsecured property tax lien with Los Angeles County for a boat i owned about 9 years ago. The filing date on my credit report shows 2006. Will this fall off my credit in 2016?

    • http://www.Credit.com/ Gerri Detweiler

      Unpaid tax liens may be reported indefinitely.

  • Ben

    Dear Gerri, I lived in the US (i am Australian) between 1996 and 2001. I have just relocated back to the US with my family. I went to lease a car and provided my old SSN. The leasing company just informed me i have a $100,000 tax lien recorded on my credit profile. I haven’t spoken to the IRS yet. I am not sure why / how i owe tax but its possible. However i have read that there is a statute of 10 years, after which time you are no longer liable for the debt. Given it is 14 years since leaving the US and the period which there could have been a tax liability caused, how/is there a way to remove it from my credit file? Also can i get confirmation from the IRS it is past the statute and not due?

    • http://www.Credit.com/ Gerri Detweiler

      Given the amount of money involved, I would suggest you consult a tax professional who handles tax problems before you do anything else. Unpaid tax liens may be reported indefinitely, so you need to talk with the tax professional both about the debt and your options for getting it off your credit reports.

  • BPM

    I have a Federal Tax Lien that was released(I have the Form 668 stating such) and the IRS actually paid me back for years of interest and penalties, etc.. How can I get this tax lien and public record removed from my credit reports?

  • mike

    I have an ohio state tax lien that was entered on june of 2006. If I pay it off now, will it be removed from my credit report or will the clock restart and be on the credit report for another seven years as paid/satisfied?

    • http://www.Credit.com/ Gerri Detweiler

      Tax liens may be reported for seven years from the date they are paid. (As a practical matter some credit reporting agencies remove them sooner if the tax lien is quite old.) However, you can check if your state has a program similar to the federal Fresh Start program where you can get a tax lien withdrawn when it is paid. If not that may be something to suggest to your state legislators.

  • Puneet


    I had lived in California till 2010 and then moved to India. I just came back in July 2010 and have found out that California Tax Board has applied a Tax Lien of $3700 (approx) for some securities income that had not gotten reported. I have paid the amount and Tax Board has issues a Notice of Release of Lien. However, as I had moved out to India and they did not have my India address, I never received any notice. So, technically, I should not be penalized for something I was not aware of. Secondly, Tax Lien has been put because of certain securities that I earned had not been reported and IRS applied taxes on the entire amount rather than capital gains – so I am expecting California to return some of that amount.

    So, I have two questions. Will getting this lien being removed recorded with credit bureaus help in improving my credit score that was hit by the application of this lien? Second, what do I need to do to get this lien expunged from my records.

    Any help would be appreciated.


    • http://www.Credit.com/ Gerri Detweiler

      Paying the lien does not remove it from your credit reports. It can still be reported for seven years from the date it was paid and released. (The Fresh Start program referenced in this article can get liens removed, but it applies to federal tax liens, not state ones.)

      To challenge the validity of the tax lien will require the assistance of a tax professional. Unfortunately,t that’s beyond our area of expertise.

  • Adam Clark

    What if my lien was filed by a local government department and not the IRS?

    • http://www.Credit.com/ Gerri Detweiler

      Then this particular program doesn’t apply unfortunately. You’ll have to contact the taxing authority to see if they offer something similar.

  • KIM

    I have a South Carolina state tax ien on ym credit report. It’s been paid since 2013 and released. How do I get it removed from my credit report?

    • http://www.Credit.com/ Gerri Detweiler

      Paid tax liens can generally be reported for ten years. The program described in this article is for federal tax debt. You’ll need to check to see if your state offers something similar.

  • Todd

    When discussing tax liens on your credit file are we talking STATE or FEDERAL? Also what does the law actual say? After the tax lien is satisfied, do they stay on your credit file for 7 years from date filed or date you satisfied them? I have seen this stated both ways on the internet. I have a state tax lien from ’09 taxes (dept of revenue filed 6/21/2011) I never knew about this until I sold my house in late 2014. Upon discovery I paid immediately ($600 on 11/05/2014) and it has been released (with letter from Indiana Revenue Dept). I wrote the credit burea sending them a copy of the letter requesting this removed and they sent me a letter stating “Estimated month and year item will be removed” 5/2021. Are you freaking kidding me! This will stay on my report for 10 years! I’m trying to be professional but this is a crock………

    • http://www.Credit.com/ Gerri Detweiler

      This article refers only to federal tax liens.. The Fair Credit Reporting Act says “Paid tax liens which, from date of payment, antedate the report by more than seven years.” And you’re right– Congress allowed tax debt be reported longer than any other type of negative information. You may want to contact your state legislators. Some states have enacted provisions that emulate the federal policies, but most have lagged behind.

  • Harper Davis

    once an irs tax lien has been satisfied, is the effect on a individual’s credit still ongoing?

    • http://www.Credit.com/ Gerri Detweiler

      It can be. Paid tax liens may be reported for up to seven years after they are paid, so if you think you may qualify for the relief in this story it’s worth applying. If the lien is removed it can’t affect your credit scores.

      This article may also be of interest to you: How Long Does It Really Take to Improve Your Credit?

  • bob w

    why can a tax lien, IRS or State be on a credit report if its been paid, i thought the lien was removed when the lien was satisfied. why would they allow an item that was paid to be left on a credit report when it was satisfied?

  • chilipepper78

    I followed this procedure to the letter and got my withdrawl letter from the IRS but it is still being reported on public records by my county clerk even though they have a copy. They said they won’t ever remove the lien from public records. WHat now?

    • Jeanine Skowronski

      You may want to consult a consumer or tax attorney about your best legal recourse.

      Thank you,


      • chilipepper78

        I also found out that it has been reported long past the 7 year deadline and still won’t be removed. Something fishy going on in Michigan other then bad water in Flint

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