Tax Lien Withdrawal

What is Tax Lien Withdrawal?

The IRS places a tax lien on property or assets when you fail to pay a tax debt. A tax lien withdrawal makes it easier to sell your property or assets if you have a federal tax lien placed on them. Furthermore, the lien withdrawal removes the Public Notice of Federal Tax Lien from the asset in question. In other words, the IRS is no longer in competition with other creditors. Moreover, you may be eligible for a Lien Withdrawal if you have entered into a direct debit installment agreement. Another method is to come to some sort of an agreement regarding your tax debt with the IRS. 

How Can I Become Eligible?

For starters, the IRS allows for two options:

  • OPTION 1: Lien has been paid off and released

According to the IRS, the criteria for this option is as follows:

  • First, your tax liability has been released
  • Second, you have filed all tax returns for the past three years (individual, business and information)
  • Third, you are current on all estimated tax payments and deposits
  • OPTION 2: Direct debit installment agreement allows for the filing of a tax lien withdrawal

This option allows you to file for a withdrawal if you have entered into a direct debit installment agreement. Another option: your regular installment agreement was converted into a direct debit installment agreement. 

According to the IRS, you can use this option if you/your:

  • are a qualifying taxpayer (i.e. individuals, businesses with income tax liability only, and out-of-business entities with any type of tax debt)
  • owe $25,000 or less (balances must be paid down to $25,000 prior to requesting withdrawal of the Notice of Federal Tax Lien)
  • are in full compliance with other filing and payment requirements
  • have made three consecutive direct debit payments
  • have not defaulted on your current or any previous Direct Debit Installment Agreement
  • Direct Debit Installment Agreement pays the full amount owed within 60 months or before the Collection Statute expires

Other Options for Tax Lien Withdrawal

First of all, an application requesting a lien withdrawal is filed with the IRS.

To continue, here is a list of other criteria for eligibility besides the above options:

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

In addition to meeting the above criteria, you must provide documentation to support the claim. Moreover, you must list the financial institutions to be notified of the withdrawal of the tax lien. In conclusion, lien withdrawals can be very complicated. The best advice is to consult a tax professional to prevent any missteps. Visit our page explaining our tax problem resolution services for more information.

What Is A Direct Debit Installment Agreement?

The key to most eligibility requirements is the entering into a direct debit installment agreement. This true even if you still have a tax debt. A direct debit installment agreement is simple: installment payments are paid directly from your bank. You can simply set this up online through the IRS website.

Next Steps:

A public notice of a federal tax lien on your assets renders them undesirable to buyers and creditors. Applying for a tax lien withdrawal may be the best option if you are wanting to sell these assets.

It is best to consult a tax professional to determine if this is the best option for your situation. A tax professional can assist you with the filing of the withdrawal of tax lien. Call today to consult with a tax professional about your situation.

Visit our FAQ section for more information on this topic as well as other important topics.


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