TAP 05-019

Federal Lien Release on Credit Records

Statement of Issue:

When a lien is released, taxpayers are not informed that the IRS is not responsible for informing credit bureaus. It is the responsibility of the taxpayer to ensure that the lien is expunged from credit bureau and public records after the IRS is paid. Otherwise, the lien will reappear in a future credit search.

Proposal:

TAP recommended that Notice 48, Release of Federal Tax Lien, be revised to notify taxpayers that, in order to minimize the effect of the federal tax lien on their credit history, a copy of the Certificate of Release of Federal Tax Lien should be sent to each credit reporting agency, and the Notice should be included with the taxpayer’s copy of the Certificate.

Revision and inclusion of Notice 48 with the certificate of lien release that is mailed to the taxpayer would alleviate the number of complaints received by local Taxpayer Advocate Service offices and Taxpayer Assistance Centers, as well as, provide better customer service to the client community. It would also mitigate the negative financial impact of a tax lien on a taxpayer’s credit score that might adversely affect the interest rates charged the taxpayer.

Response Notes: