A tax lien withdrawal completely removes the Notice of Federal Tax Lien (NFTL) from the public records. This lets your other creditors know that they won’t have to compete with the IRS, and could make it easier to sell, refinance, or borrow against your home.
The IRS only grants lien discharges for a few different reasons, and you’ll need to choose one of these reasons when you request a lien withdrawal using Form 12277.
Premature or Improper Liens
The IRS will withdraw a lien that was not filed in accordance with IRS procedures. This basically means some technicality makes the lien filing improper.
If you were in bankruptcy when the lien was filed, this provision would apply. It also applies when the person who filed the NFTL knew you had a credit on your account to satisfy the liabilities on the lien.
This provision may also apply to some active duty military in Combat Zones or outside the United States, and for liens filed due to an Obamacare Shared Responsibility Payment.
Installment Agreements
Some installment agreements may provide that a lien withdrawal will be granted once certain conditions are met. Direct Debit Installment Agreements (DDIA) for tax debt of $25,000 or less may permit lien withdrawals if you are in tax compliance and make three consecutive payments.
If you have an existing regular installment agreement, you can convert it to a DDIA if you want to seek a lien withdrawal.
Facilitating Collection
The IRS can withdraw a lien to facilitate collection. You’ll have to show a direct connection between the lien withdrawal and how it will allow you to pay off your tax debt.
These cases may involve taxpayers with few assets for the lien to attach to. Because the IRS lien interest isn’t worth much, a lien withdrawal may facilitate collection if allows the taxpayer to get a loan or make payments towards their tax debt.
Best Interests of the Taxpayer and Government
This is a catch-all provision. It gives the IRS a chance to withdraw a lien even when none of the other reasons apply. This provision doesn’t give much guidance on what qualifies as the best interests of the government, so talk to a tax attorney before you try to use this as a reason for requesting a lien withdrawal.
Even if you don’t qualify for a lien withdrawal, you may be able to get a discharge or subordination to accomplish your objectives. Consult a tax attorney to get help minimizing the consequences of an IRS tax lien.
Get help with IRS tax debt problems by calling The Gartzman Law Firm at (770) 939-7710. We can listen to your concerns and help you find the best tax resolution strategy for your case.