Receiving the dreaded NTFL is always a reason for concern for a taxpayer. The Notice of Federal Tax Lien, or NFTL for short, is a public notification that communicates the government’s claim on a taxpayer’s assets or property, against an outstanding tax debt. According to the Internal Revenue Code, a tax lien cannot be released until it becomes “legally unenforceable”, the defaulter settles the liability, or a bond is provided. So, what can you do to obtain an IRS lien withdrawal for your active NTFL. Keep reading as we explore the answer in this blog post.
The Law on Lien Withdrawal
The Internal Revenue Code, section 6323(j), states that the IRS may withdraw a lien if certain conditions are met. In such cases, the relieved taxpayer receives Form 10916 – “Withdrawal of Filed a Notice of Federal Tax Lien”, and the IRS can also issue a copy of the notice the creditors or financial institutions suggested by the taxpayer.
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Here it is important to note that a “Withdrawal of Filed Notice of Federal Tax Lien” is not the same as a “Certificate of Release of Federal Tax Lien”. While a Withdrawal only removes the effect of the NFTL, the Certificate releases both the NFTL and the tax lien.
How to Request
To request for an IRS tax lien withdrawal, although taxpayers need to use Form 12277 – “Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien”, a written request providing complete information of the case may be acceptable. The request, however, must be duly signed by the applicant or a POA (Power of Attorney). Taxpayers can also fax their requests.
The request must include the following:
- Current address
- Identification number
- A copy or details of the NFTL
- An explanation of the basis for the request
- Authorization for disclosure of information to credit agencies and financial institutions
Cases of Joint Liability
If the IRS has issued an NFTL on a joint liability, the request for withdrawal doesn’t have to be signed by all co-obligors; it is considered as a request for a full withdrawal unless a co-obligor expresses otherwise. If, however, there are any issues with the non-applying co-obligor(s), which may prohibit the issuance of the withdrawal, the request is considered for a partial withdrawal, or the applicant may be asked to secure the signature(s) of the other co-obligor(s).
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The Last Word
Contrary to the common notion, issues with the IRS don’t always mean all is lost. In fact, with the right approach and guidance, no mountain is too high to climb. If you or someone you know has received an NFTL, don’t lose hope. Speak with one of our IRS tax attorneys to chart out a way for redemption. Our team has extensive experience in helping both individuals and businesses come out of their tax problems, including tax lien assistance. For a free consultation, simply call (972) 484-0829 or fill out our contact form and we will contact you as soon as possible.