IRS forms can sometimes feel unnecessarily convoluted and difficult to navigate, none more so than IRS Form 12277. This form is essentially a petition to remove a federal tax lien on a property. If you’re curious about this form, it’s probably because you’ve been informed by the IRS that they have placed a federal tax lien on your property. Below, we’ll discuss how this happened and how you can reconcile the situation.
The IRS Can Place a Lien on Your Real Estate
The IRS can place a tax lien on real estate without going through the same channels that private creditors are required to go through. They don’t have to file a lawsuit against you and they don’t need to obtain a judgment in their favor. If your taxes are more than 10 days past due, the lien is automatically created.
The lien allows the IRS to recover any money made from the sale of your property. This includes your homestead property. Once your home is sold, the IRS recovers the tax debt from the proceeds. But the lien also makes the home more difficult to sell. It also is a black mark on your credit and can make it more difficult to get a loan or refinance your current mortgage.
Dealing with an IRS Tax Lien
If you have a lien on your property, you probably want to get it removed. This can be quite frustrating. A tax lien on your public record will negatively affect your credit making it more difficult for you to get back on your feed. The IRS introduced Form 12277 as part of its Fresh Start Initiative. Before the lien can be removed, the tax debt must be resolved.
Once the tax debt has been resolved, the taxpayer can file form 12277 to have the lien removed. However, this does not necessarily remove notice of the lien in the public records. Potential employers or creditors can still access public records that show you have a tax lien on your property. This can negatively impact your credit even after you’ve resolved your debt. Form 12277 removes the lien and it removes the lien from public records. To restore your credit, you may need to file IRS Form 12277.
When Will the IRS Withdraw a Federal Tax Lien?
The IRS will not always grant a request to remove a federal tax lien. Essentially, there are only four situations in which the IRS will consider removing the lien. Those are listed below.
- Notice filed prematurely – If the IRS determines that they were mistaken to have placed the lien on your property, you can have it removed from the public record.
- Installment agreement – If the taxpayer has entered into an installment agreement with the IRS to repay the debt and the agreement did not require a Notice of Federal Tax Lien to be filed.
- Lien withdrawal makes it easier to recover the debt – If an IRS tax lien is making it more difficult for the IRS to recover the debt, the IRS will lift the lien.
- The lien withdrawal is in the IRS’s best interest – This is sort of wildcard to cover situations not covered by the other three requests. A taxpayer can argue that the removal of the lien is in the IRS’s best interest.
Each of these provisions has specific criteria that must be met before the IRS will remove the lien. Simply repaying the debt is not enough to remove the lien notice from the public record. A skilled attorney can not only help you fill out the form but argue your case to the IRS.
One of the most common reasons why IRS tax liens are withdrawn is that they negatively impact the government’s ability to recover the debt. A skilled tax attorney can ensure that you have the necessary evidence to make your case to remove the lien from public records.
Talk to a Virginia Tax Attorney Today
If you have a tax lien on your property and you want to get it removed and get notice of the lien removed from public records, Sodowsky Law Firm, P.C. can help you file IRS Form 12277 and argue your case. Talk to us today for more information on how we can help.