Is The Federal Tax Lien Withdrawal Policy Retroactive?

On February 25th I wrote this article summarizing the IRS’ new tax lien policy and what it meant to consumers who wanted to get Federal tax liens removed from their credit reports.  The IRS’ announcement, which can be seen here, doesn’t specify whether or not their new rules regarding withdrawals are retroactive.

Today we may have been given a clue as to their willingness to withdraw tax liens that predate their new tax lien policy announced February 24, 2011.  I spoke with a gentleman from Texas who didn’t want to be identified.  I’ll call him Paul for this piece.

Paul had a Federal tax lien filed against him in January 2008.  The amount was $10,600.  He paid the lien in full in June of 2008 and the lien was subsequently released.  On his credit reports the lien showed as being released.  Federal tax liens remain on your credit files for 7 years from the date released so Paul thought he was going to have to live with it on his credit file until June 2015.

He read my above referenced article, decided to roll the dice, and contacted the IRS.  Using form 12277 (Application for Withdrawal of Filed Form 668(y), Notice of Federal Tax Lien) he requested that the lien be withdrawn.  To his surprise two weeks later he received, in the mail, form 10916 (c) (Withdrawal of Filed Notice of Federal Tax Lien).  Paul sent the form to Experian and TransUnion today.  They are the only two credit bureaus currently reporting the lien.

The IRS’ policy of withdrawal seems to be retroactive.  We don’t know if the age of the lien played a part in their decision to withdraw it.  We don’t know if the relatively small amount played a part either.  What we do know is if the IRS policy is truly retroactive there are going to be a lot of people getting them removed from their credit reports well in advance of the 7 year credit reporting statute of limitations.

John Ulzheimer is the President of Consumer Education at, the credit blogger for, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.


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