Overview

An erroneous tax lien creates a public claim on your property that can stop a sale, complicate refinancing, and appear in title searches even after you fix the underlying issue. The practical route to clear an erroneous lien usually begins with documentation, an administrative challenge to the agency that filed the lien, and, if unresolved, litigation (quiet title). This article gives step-by-step actions, documentation checklists, and realistic timelines.

Step-by-step actions to clear an erroneous tax lien

1) Confirm exactly what was filed and who filed it

2) Gather evidence that the lien is erroneous

  • Collect proof of payment (bank records, cancelled checks, payment confirmations), corrected tax returns, identity and SSN/EIN records, and any correspondence showing the agency’s error (address mistakes, identity mix-ups, agency clerical error).

3) Contact the filing agency promptly and request correction or withdrawal

  • For federal liens: request a withdrawal when withdrawal criteria are met (withdrawal removes the public Notice of Federal Tax Lien and may restore clear title) using the IRS procedures — often initiated with Form 12277 (Application for Withdrawal of Filed Notice of Federal Tax Lien) or by working directly with the IRS Collection office handling your account. If you received a Notice of Federal Tax Lien and believe it is incorrect, you can also seek a Collection Due Process (CDP) hearing (Form 12153) to dispute the lien. (IRS: https://www.irs.gov/businesses/small-businesses-self-employed/withdrawal-of-notice-of-federal-tax-lien)
  • For state or local tax liens: contact the state revenue or taxing authority’s collections or legal division. Each state has its own process for lien withdrawal, release, or correction—ask for written confirmation of next steps and a timeline.

4) Follow the agency’s dispute process in writing and by certified mail

  • Send a concise cover letter, copies of evidence, and a request for withdrawal or release. Keep originals and send everything certified mail with return receipt. Document each phone call (name, date, time, summary).

5) Escalate if the agency won’t cooperate

  • Ask to speak with a supervisor, request a written denial if they reject your request, and ask for specific reasons and the appeals path. For IRS federal liens, if administrative remedies fail, you can file a Collection Appeal or pursue a CDP or equivalent hearing. For persistent errors, a quiet title action in state court can force removal of an invalid lien.

6) Obtain formal proof of removal and clear title

  • A successful outcome can include: (a) a Withdrawal of Notice of Federal Tax Lien (removes the public notice), (b) a Certificate of Release/Release of Lien when tax is satisfied, or (c) a court order cancelling the lien. After the agency issues release/withdrawal, record that document with the county recorder and request an updated title report.

Timelines and likely outcomes

  • Administrative fixes (withdrawal or correction) commonly take weeks to a few months after you submit a complete package; complex or contested cases can take longer. If you must file in court, expect several months to a year depending on local court schedules and case complexity.

When to hire a professional

  • Hire a tax attorney or experienced CPA if: the filer refuses to withdraw or release the lien, the amount is large, identity- or fraud-related issues exist, or the matter requires litigation. In my practice I’ve found early legal involvement often shortens the timeline and prevents avoidable title delays.

Practical tips and checklist

  • Document checklist: recorded lien copy, payment proofs, bank statements, corrected returns, correspondence, IDs, tax account transcripts.
  • Send documents certified mail and keep all confirmations.
  • Keep title company and real estate agent informed if you’re trying to close a sale.
  • Ask the agency for a written denial before pursuing court remedies.

Common pitfalls

  • Assuming payment alone clears the public record. A lien often remains on record until the agency issues a formal release or withdrawal and you record that document locally.
  • Ignoring a lien notice. Delays let problems compound and can lead to enforced collection.
  • Failing to get written confirmation when the agency corrects the record.

Related FinHelp resources

Authoritative sources

Disclaimer

This article is for educational purposes and does not constitute legal or tax advice. For advice tailored to your situation, consult a qualified tax attorney or CPA.