Many clients come to me with the following questions about their tax liens: I had a tax debt that I could resolve, and I have now paid off my tax debt. I received a notice that my tax lien was released, but I have heard about a lien withdrawal. What is a lien withdrawal? Are a lien release and lien withdrawal the same thing?

What exactly is a Lien Withdrawal, and How Does it Differ from a Lien Release?

Although their names indicate they are similar, a lien release is not the same as a lien withdrawal. A lien withdrawal is a request to have an IRS tax lien withdrawn from public record, regardless of whether or not the tax debt has been paid off. In contrast, a lien release occurs only once a tax debt has been fully satisfied or the timeframe the IRS had to collect the debt expires and does not erase the lien from the record.

Historically, tax liens were included on a taxpayer’s personal credit report. As of 2018, this practice was omitted by the major credit reporting agencies. The main reason for this change was based upon a study conducted by the Consumer Financial Protection Bureau that found a sufficient number of judgments and liens connected with the wrong taxpayer. You can imagine the headache involved with proving that though you have a lien reported on your credit report and your name is John A. Smith, you are not that John A. Smith! This move by the credit reporting bureaus also created identity protection for taxpayers with tax account issues by preventing tax return information from being disclosed to third parties. However, the same does not hold true for business tax accounts, as current and released tax liens are reported on a business’ Dun & Bradstreet, Experian, and Equifax credit reports.

Despite the major credit reporting agencies excluding tax liens on personal credit reports, this doesn’t mean the tax lien does not still affect a taxpayer’s ability to obtain assistance from financial institutions. As stated above, a tax lien is a public record, and most lending institutions will complete a public records search to look for such liens during the lending process.

What Are the Benefits of Requesting a Lien Withdrawal?

First and foremost, a withdrawal will assist in removing the effect a lien can have on working with banks and lenders or any threats to vocational or professional licenses. By withdrawing the lien from public record, there is no longer a flag that your creditworthiness or professionalism should be questioned. In summary, a Lien Withdrawal can provide insurance that a tax lien will no longer haunt one’s life.

What Qualifications Must Be Met to Request a Lien Withdrawal with the IRS?

The first way to qualify for a lien withdrawal would be to pay your tax debt in full, which initiates the release of the tax lien 30 days after the debt is paid in full. A request for a lien withdrawal after a lien has been released is usually processed quicker as long as the taxpayer is compliant with all tax return filings and current tax payment requirements.

However, fully paying a tax debt is not the only qualification to request a lien withdrawal. Some other conditions include the following:

• Premature or erroneous tax lien filing
• Listing a non-liable taxpayer
• Tax lien filed against a taxpayer in a Federally Designated Disaster Area
• A taxpayer enters into a Direct Debit Installment Agreement with an aggregate unpaid balance of $25,000 or less and will be paid within 60 months. Please note that a withdrawal request cannot be submitted in this instance unless the taxpayer makes three consecutive payments under the agreement and has not defaulted on previous agreements.
• Other special conditions evaluated on a case-by-case basis

It is essential to know that no matter what form of request the withdrawal falls under, a taxpayer must be compliant with all tax return filing and payment requirements. If a taxpayer is not compliant, the withdrawal request could be denied.

What Does the Process for Submitting a Lien Withdrawal Request Look Like?

Thankfully, submitting a withdrawal request is one of the more straightforward processes with the IRS. Once it is determined that a taxpayer qualifies for a lien withdrawal, the request is compiled and submitted to the IRS for processing. The IRS will review the taxpayer’s account to confirm all qualifications are met and then will issue a determination. Once approved and the Notice of Lien Withdrawal is issued, the IRS will notify all major credit reporting agencies that the tax lien was withdrawn, if requested by the taxpayer. As you can see, quick and easy, as long as all qualifications are met.

The Golden Lion Tax Solutions team has extensive experience with all the different types of Requests for a Lien Withdrawal with the IRS. We will ensure your request is submitted promptly upon meeting the qualifications. So, contact us today to review your options and establish a solid game plan to resolve your tax debt issues and ensure your tax lien is appropriately withdrawn.

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Disclaimer: There are requirements that must be satisfied in order to qualify for some of the tax solutions we discuss on our website. Not all of our services will be suitable for every client. Golden Lion Tax Solutions is here to help you find the most appropriate solution to fit your situation.