If you have fallen behind on your taxes, the federal government may file an IRS tax lien against you.  These liens are similar to a mortgage in that they are a legal claim against your property.  But IRS tax liens are much more powerful than your typical home mortgage because they are a claim against all of your property, even property you acquire after the IRS’s lien has been filed.

Taxpayers generally want to remove IRS liens as soon as possible because they are a glaring blight on the taxpayer’s credit record.  But until recently, the only way to remove an IRS lien was to first pay all of the taxes, penalties, and interest owed to the government and then request the IRS remove its lien.  Now however, as part of what the IRS has called its “Fresh Start,” the IRS will withdraw its lien before all of the past due taxes, penalties, and interest are paid if certain requirements are met.

In order to qualify for the early withdrawal of an IRS lien, a taxpayer must:

1. Owe the IRS $25,000 or less.  Taxpayers who owe more will qualify if they first pay the amount owed down to $25,000.
2. Enter into an agreement with the IRS to pay the amount owed with monthly installment payments that are electronically debited from the taxpayer’s bank account.  In most cases, the full amount owed must be paid in no more than 6o months.
3. Be in full compliance with other filing and payment requirements.
4. Not have previously received a lien withdrawal for the same taxes unless the withdrawal was for an improper filing of the lien.
5. Not have defaulted on the current, or any previous, direct debit installment agreement.

If all of these qualifications are met, and the taxpayer adheres to the installment payment agreement for a three-month probationary period, the taxpayer may then request an early withdrawal of the IRS lien.

The Internal Revenue Service has recently changed its policy regarding certain taxpayers who owe back taxes. These changes allow more people to qualify for a “Streamlined Installment Agreement.” The changes also make it easier for these taxpayers to meet their payment obligations under the agreement. For those who qualify, this makes dealing with back taxes much easier and less stressful.

Under the old policy, taxpayers who owed $25,000 or less qualified if they agreed to pay the balance owed (including interest and penalties) in 60 months or less. Under the new policy, taxpayers who owe $50,000 or less qualify. In addition, taxpayers now have up to 72 months to pay the balanced owed.

A Streamlined Installment Agreement does not require the taxpayer to provide the IRS with the detailed financial information required under a standard installment agreement. There are no stressful “negotiations” with the IRS about how large a monthly payment the IRS will require. The taxpayer qualifies if he or she

1) owes $50,000 or less

2) agrees to pay off the balance in 72 months or less

3) files all required tax returns. That’s all there is to it.