In 2011, the IRS kicked off its Fresh Start Initiative to help troubled taxpayers be concurrent with their dues. Some of the changes implemented under this program were the withdrawal options regarding tax liens. Contrary to a lien release, a lien withdrawal pulls the Notice of Federal Tax Lien out of the public records, preventing further capital transactions (e.g. loans) from being affected.
Prior to the Fresh Start Initiative, lien withdrawal was limited to a select few. One also had to wait for years before a withdrawal can actually take place, thereby frustrating taxpayers who need to take out loans and the like. In response, the IRS added two more withdrawal options, provided taxpayers met the requirements.
Withdrawal upon Full Payment
After paying your dues in full, you can file a request with the IRS to remove the lien from records. Aside from paying your dues in full, you can qualify for this option if:
- You’ve been current with your tax filings within the last three years.
- You’re current on your estimated tax payments and tax deposits.
Direct Debit Installment Agreement (DDIA)
A DDIA is designed for taxpayers who can’t afford wage garnishments for practical reasons or when other payment options have failed for them. In return for a payment agreement, the IRS will remove the lien right away. This applies to tax debts of $25,000 or less.