According to this, the IRS will remove tax liens if paid in full. I sent off my request today and will let you know. I dont "need" the points to get the house, but it'd be nice to get that nasty thing off my credit before closing.
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Oh no! I'm not going to dispute it. My scores are fine right now for the mortgage and .25-.50 percent doesn't make a HUGE difference on an itty bitty loan for a 55k home to have my score increase. I'm just hoping to get it removed since it's possible because I don't want it on my report for the next 5 years, and I'm curious as to how my score might increase. I sent off the request today and I'm sure the IRS will take their time getting around to it.
What had happened was in 2004 I filed my taxes wrong and didn't claim money I had taken out of my IRA account because my son was only 2 and disabled and I couldn't keep a job because of having to care for him and he was denied medical through the state because I had an IRA account. I forgot to put this on my taxes, as it was only the 2nd year I filed my own taxes and I took the money out in Jan and didn't really think of it. They notified me in 2006 that I owed $8600 from a $2800 debt. There was no way I was in a position to pay that. They filed the lien in 2008 and just took my returns every year until it was paid in full. Every year charging more money to me. So they made a bunch of money off of me that I really couldn't afford for them to take. None-the-less, I don't want it on my report. I know it's frowned on, paid or not, and it cost me a really good job 2 years ago right before I had paid the remainder off.
This site has a link to the form: Mod Cut. Unfortunately that link contains other links to credit repair sites that aren't allowed to be posted here - MarineVietVet, myFICO moderator. Here is a direct link to that IRS form.
Allegedly, it's a fairly simple process if they've been paid.
Hope this helps. 
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