How to Erase a Tax Lien from Your Credit Report

A federal tax lien is one of those stubborn things that can stay on your credit report for years – actually seven full years after they have been paid in full.

With a tax lien on your credit report, you may as well stamp “denied” on new credit applications. Not only will your credit score drop by between 50 and 200 points, you’ll also have a very hard time convincing anyone to lend you a penny. The purpose of a tax lien is to give the government first “dibs” on your assets for settling debts. And when Uncle Sam calls dibs, lenders back way off.

But all hope is not lost! Back in 2011, the IRS put in place a program that allows you to have your tax lien removed from your credit report – even if you are still paying it off! Here’s how:

How to Erase a Tax Lien from Your Credit Report

Step 1: Figure out if you have paid the lien off in full or not.

Step 2: If the lien has a zero balance, fill out IRS form 12277 (668Y), check the box for “Released” on line 10, mark the last option for line 11 (the taxpayer believes withdrawal is in the best interest of the taxpayer and the government), attach a copy of your release notice from the IRS (if you have it) and send it in.

Step 3: If the tax lien still has a balance left on it (and you owe less than $50,000 total in all back taxes including the lien), contact the IRS to set up a payment plan with automatic payments deducted monthly from your bank account. (If you don’t have a bank account, you will have to get one for this to work.) You can go to to find links to the forms you’ll need to apply by mail. You can also apply online at

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Step 4: Once the direct debit payment agreement is in place AND you have made at least three payments, fill out IRS form 12277 (668Y), check the box for “Open” on line 10, mark the second option for line 11 (the taxpayer has entered into an installment agreement…), also mark the box just below that indicates you have direct debit set up, and send it in.

Step 5: In either case, you will receive a response from the IRS in several weeks. If your withdrawal is approved, you will receive a notice from the IRS with Form 10916(c), Withdrawal of Filed Notice of Federal Tax Lien. Send a copy of this form to each of the three credit reporting companies with a brief letter requesting the lien be removed from your credit report.

Mailing addresses:

Experian, P.O. Box 4500, Allen, TX 75013 or online at

Transunion, Consumer Dispute Center, P.O. Box 2000, Chester, PA 19016 or online at

Equifax Information Services LLC, P.O. Box 740256, Atlanta, GA 30374 or online at

Step 6: In 4 to 6 weeks, you’ll get a response from the credit reporting companies. Be sure to check your credit reports to make sure the lien is removed!

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Other articles that may interest you:
BIG News for Your Credit Report in 2017
Why Do I Have Three Different Credit Scores?
3 Ways to Improve Your Credit After Tax Season

This information is intended for informational and educational purposes only and not as legal advice. If you have concerns about your credit report, harassment, identity theft, illegal collections activity, garnishments, or property liens, you should consult an attorney who specializes in consumer rights and defense.

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