What Is IRS Form 12277?
Form 12277 is the IRS application to withdraw a tax lien. Taxpayers who want to request the withdrawal of a Notice of Federal Tax Lien (NFTL) from public record will need to complete and mail the “Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien” to the IRS.
IRS 12277 includes a section called “Reason for Requesting Withdrawal of the Filed Notice of Federal Tax Lien.” Taxpayers must place an “x” on each box that applies to their request to have the lien withdrawn.
Reasons include:
- NFTL was filed prematurely or was not compliant with IRS procedures
- Taxpayer has an IRS payment agreement for the tax debt attached to the lien
- Withdrawing the NFTL helps the IRS collect the tax debt
- Lien withdrawal is best for both the IRS and taxpayer
Who Is Eligible to Withdraw a Federal Tax Lien With Form 12277?
You can ask the IRS to withdraw an NFTL notice for unpaid taxes from public records if you can prove:
- The NFTL was filed incorrectly
- You are currently enrolled in an IRS payment plan such as a Direct Debit Installment Agreement
- You have filed all required tax returns from previous years
If the IRS removes an NFTL from public records but you later default on your monthly payment plan, they will likely file a new lien notice.
How Can an Installment Agreement or Offer in Compromise Help With a Tax Lien Withdrawal?
Installment Agreements allow taxpayers to make monthly payments for back taxes to avoid IRS collections actions.
If you owe less than $25,000 and enter into a Direct Debit Installment Agreement, the IRS may remove a tax lien.
In addition, you can submit Form 12277 to request a lien withdrawal if you make at least three consecutive direct debit payments, regardless of the amount of tax debt you owe.
An Offer in Compromise (OIC) payment agreement lets taxpayers resolve tax debt for an “offer” amount that is a fraction of what is owed. They will remove the tax lien once you complete your OIC payment(s).
What are the Differences Between a Tax Lien Withdraw and a Release?
A tax lien withdrawal removes public notices of the lien so that it appears it was never filed against you.
When a tax lien is withdrawn it does not mean the IRS has forgiven the tax debt or removed the actual tax lien.
Alternatively, a tax lien release means there is no longer a lien. A released tax lien, however, will remain a public record.
The only way to remove a tax lien from public records is to request a tax lien withdrawal using IRS Form 12277.
What Information and Documents Do You Need To Fill Out the Tax Lien Withdrawal Form?
In addition to your personal information, you must include the lien number, the year(s) the lien covers, and details about the lien.
Make sure your explanation for requesting a tax lien withdrawal is thorough and supported by documents, such as providing the IRS with copies of your payment plan (Installment Agreement, OIC, etc.), and proof of your monthly payments, if applicable.
Where Do You Send Form 12277?
Form 12277 should be sent to the IRS office address listed on the tax lien notice. Sending the form to the wrong address can cause lengthy processing delays.
You can also mail 12277 via certified mail to confirm it was received by the IRS.
How Long Does It Take the IRS to Process a Withdraw Request for a Tax Lien?
In most cases, the IRS processes withdrawal requests for liens within two months. If they approve the Form 12277 request, the taxpayer will then receive a Notice of Withdrawal of Filed Notice of Federal Tax Lien.
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