You must ask the IRS to withdraw a tax lien once the tax liability is fully paid.

The Service will withdraw the lien:

• Provided you have paid your tax bill
• The IRS has released the lien
• You have been tax-compliant for the past three years

A withdrawal of a tax lien expunges the lien immediately from the debtor’s records, and it is as if the lien had never been filed. Use Form 12277 to request a withdrawal.

You may ask for a lien withdrawal even if you haven’t fully repaid the debt, provided the amount that you currently owe the Service doesn’t exceed $25,000 and you agree to pay off the rest via monthly debits from your bank account.

Kiplinger Tax Letter

October 2020