Federal Tax Lien Withdrawal: Eligibility Requirements

In our recent posts, we’ve talked all about what a Federal Tax Lien is, how you know if one has been placed against your assets, how to avoid a Federal Tax Lien, what your options are when you receive a Notice of Federal Tax Lien, and in our last blog post, we discussed the Federal Tax Lien Withdrawal, which, according to the IRS’s page, Understanding a Federal Tax Lien, as of Dec. 24, 2020, means the IRS “removes the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property; however, you are still liable for the amount due.”

In our last post, Federal Tax Lien Withdrawal, we went over the three lien withdrawal scenarios, and in this post, we’ll discuss each of their requirements in greater detail.

Federal Tax Lien Withdrawal Eligibility Scenarios

1. You’ve paid off the lean and it’s been released

According to our Federal Tax Lien Withdrawal Service Page, “the criteria for this type of tax lien withdrawal is as follows:

  • Your tax liability has been released.
  • You are in compliance for the past three years in filing all tax returns including individual, business and information returns.
  • You are current on all estimated tax payments and deposits.”

2. You have entered, or are willing to enter, a direct debit installment agreement

Continuing on our Federal Tax Lien Withdrawal Service Page, “according to the IRS, the criteria for this option is:

  • You are a qualifying taxpayer (i.e. individuals, businesses with income tax liability only, and out of business entities with any type of tax debt)
  • You owe $25,000 or less (If you owe more than $25,000, you may pay down the balance to $25,000 prior to requesting withdrawal of the Notice of Federal Tax Lien)
  • Your Direct Debit Installment Agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is earlier
  • You are in full compliance with other filing and payment requirements
  • You have made three consecutive direct debit payments
  • You can’t have defaulted on your current, or any previous, Direct Debit Installment agreement.”

3. You’re unsure

Lastly, it goes on to say that “if you are not sure which option your needs fall under, the IRS provides other eligibility criteria to help you dictate whether a withdrawal could work for you. In order to be eligible, you must request the withdrawal by filing an application with the IRS. Other criteria listed by the IRS in order to provide eligibility includes:

  • You can provide evidence that the tax lien was not in accordance to IRS procedures or it was filed prematurely.
  • You entered into an installment agreement to Pay off the past due tax lien.
  • Your tax debt is under $25,000.
  • You’ve entered into a direct deposit installment agreement.
  • You believe that the withdrawal tax debt is in the best interest of the government and yourself.
  • Withdrawal of the lien would allow easier repayment of the tax debt.

In addition to meeting the above criteria, you must provide documentation to support the claim as well as a list of financial institutions that you would like to have notified of the withdrawal of the tax lien.”

As you can see, navigating a Federal Tax Lien can be tricky. Don’t go it alone! If you’re struggling with tax debt, contact our team of experienced tax resolution specialists at Bullseye Tax Relief today!

In our next blog posts, we’ll start talking about The Trust Fund Penalty, another scenario that might require rush tax relief.

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