Tax Lien Withdrawal
What is Tax Lien Withdrawal?
You may be eligible for a Tax Lien Withdrawal if you have entered into a direct debit installment agreement or have come to some sort of an agreement regarding your tax debt with the IRS. 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 as it removes the Public Notice of Federal Tax Lien from the asset in question. This means that the IRS is no longer in competition with other creditors.
How Can I Become Eligible for Tax Lien Withdrawal?
According to the IRS, there are two options:
OPTION 1: Lien has been paid off and released. According to the IRS, the criteria for this option 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.
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 or have converted your regular installment agreement into a direct debit installment agreement. According to the IRS, the criteria for this option is as follows:
- 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 pay the full 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 have not defaulted on your current, or any previous, Direct Debit Installment agreement
The IRS provides other eligibility criteria to help you decide whether a tax lien withdrawal is the best option for you. Eligibility for this option begins with an application requesting a tax lien withdrawal from the IRS. According to the IRS, the following is a list of other criteria for eligibility:
- You can provide evidence that the tax lien was not in accordance with 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 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 as well as a list of financial institutions that you would like to have notified of the withdrawal of the tax lien. 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, 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:
Applying for a tax lien withdrawal may be the best option for you if are wanting to sell your property and there is a public notice of federal tax lien on your assets, which renders them undesirable to buyers or creditors.
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. Give us a call today to consult with a tax professional about your situation as to whether a Tax Lien Withdrawal is advantageous for you.