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Which Is Better—A Lien Release or a Lien Withdrawal?

Posted by Brandon Keim | Oct 06, 2023 | 0 Comments

Dealing with a tax debt is difficult enough. But if the Internal Revenue Service (IRS) has placed a lien on your property from unpaid taxes, that adds an entirely new level of hardship. And what's remarkable is that resolving a tax debt doesn't necessarily free you from a lien's impact. For that, you need to complete a couple more steps. It's worth doing so, but first, it's important to understand the difference between a lien release and a lien withdrawal—and which is better.

First, it's important to know that, in the case of both a lien release and a lien withdrawal, the IRS ends its pursuit of a tax-related debt and removes the lien. However, in the event of a release, the lien's existence remains a matter of public record. In contrast, a lien withdrawal effectively removes the lien from the record as if it had never existed.

As of 2018, federal tax liens are no longer included in credit reports. This may suggest there's no longer a meaningful difference between a release and a withdrawal, but that's not true. Having any record of a tax lien can impact a debtor's financial well-being because independent lenders can still review a property's record and discover the existence of a lien, even if it's been paid off.

Therefore, most people may do better with a withdrawal rather than a release.

However, it's not always up to a taxpayer which option they want to pursue since there are different requirements for a release and a withdrawal. A release is granted only after a debtor has paid the tax debt or the debt is so old that the IRS can no longer collect it. By contrast, a taxpayer is eligible for a withdrawal if one of the following conditions applies:

  • The IRS committed an administrative error relating to the debt and lien
  • The taxpayer and IRS have agreed on a taxpayer installment plan to resolve the debt
  • The IRS's removal of the withdrawal will help the taxpayer obtain funds to pay off the tax debt
  • It's in the interest of the government and taxpayer to remove it

Whether you already have a tax lien in place or you're trying to resolve a tax dispute before it comes to a lien, contact a tax attorney and discuss whether a lien release or lien withdrawal is the best option in your case. If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.

About the Author

Brandon Keim

A Certified Tax Law Specialist, CPA, partner at Frazer Ryan Goldberg & Arnold LLP, and former Senior IRS Trial Attorney, Brandon Keim holds an LL.M. in Taxation from Georgetown University Law Center.


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