IRS Lien Withdrawal vs Release – Which One Do You Need

Paying the Tax Isn’t Always Enough—Here’s What Comes Next

If the IRS filed a Notice of Federal Tax Lien against you, resolving the debt is only part of the equation. Once the lien is satisfied, you’ll still need to decide whether to pursue a release, a withdrawal, or both.

While many taxpayers assume these terms are interchangeable, they are very different actions—and choosing the right one can make or break your ability to sell property, apply for loans, or restore your credit.

This post breaks down the differences, when each one applies, and how to request them from the IRS.

What Is an IRS Lien Release?

A lien release removes the IRS’s legal claim to your property. It occurs when:

• You’ve paid the tax debt in full
• You’ve completed an Offer in Compromise
• The collection statute (CSED) expires and the debt is no longer enforceable

The IRS will issue Form 668(Z) – Certificate of Release of Federal Tax Lien.

Related: How to Get an IRS Lien Released After Payment or Settlement

What Is a Lien Withdrawal?

A lien withdrawal removes the public notice (NFTL) entirely, as if it was never filed. This is often needed when:

• You’re entering a qualifying Direct Debit Installment Agreement
• You paid the balance and want the lien removed from credit reports and title databases
• The IRS filed the lien in error
• A lien filing prevented you from staying in compliance

You must file Form 12277 – Application for Withdrawal of Filed Notice of Federal Tax Lien to request this.

Key Differences: Withdrawal vs Release

Related: IRS Lien vs Judgment Lien – What’s the Difference?

When Should You Request Both?

If you’ve paid your tax debt but the lien is still harming your ability to:

• Sell property
• Apply for a mortgage
• Rebuild credit

…you should request both a lien release and a withdrawal.

You’ll use:

• Form 668(Z) (IRS issues this upon release)
• Form 12277 (you must request this for withdrawal)

When You’re Eligible for Withdrawal (Even If You Haven’t Paid in Full)

The IRS may approve a lien withdrawal if:

• You owe $25,000 or less
• You’ve entered a Direct Debit Installment Agreement
• You’ve made at least three payments
• You’re in full compliance with current taxes

This is a great strategy if you’re still repaying the debt but want to prevent the lien from harming future financial decisions.

We Help Orange County Taxpayers Navigate Lien Removal the Right Way

At Boulanger CPA and Consulting PC, we help individuals and business owners:

• Determine eligibility for lien withdrawal
• File all necessary IRS forms correctly
• Coordinate with escrow, title, and lenders
• Monitor IRS processing and follow-up

📞 Call (657) 218-5700 or schedule a lien strategy call at www.orangecounty.cpa

FAQ: IRS Lien Withdrawal vs Release

Q: Is a withdrawal better than a release?
A: They serve different purposes. A release removes IRS rights. A withdrawal removes the public record entirely.

Q: Will the lien show on my credit after it’s released?
A: Possibly. Credit reporting bureaus no longer display tax liens, but lenders may still see public records unless withdrawn.

Q: How do I request both?
A: You’ll receive Form 668(Z) from the IRS after release. You must separately file Form 12277 to request a withdrawal.

Q: Can I get a withdrawal while still on a payment plan?
A: Yes—if you qualify under the IRS’s streamlined withdrawal policy for Direct Debit Installment Agreements under $25,000.

📣 About the Author

Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.

With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.

Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.

Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.

📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.