Attachment to Form 12277, Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien, Section 12
Taxpayer: [Name exactly as shown on the NFTL] TIN: [SSN or EIN]
Current address: [Address] Phone: [Phone]
NFTL: serial number [Serial number near the top of Form 668(Y)], filed [Date] with [Recording office and county/state] (copy enclosed)
Periods on the NFTL: [Form and periods] Current status: [Open / Released on [date] / Self-released]
1. Ground for withdrawal
The taxpayer requests withdrawal under IRC 6323(j)(1)[(A) / (B) / (C) / (D)], corresponding to the box checked in section 11. [Keep only the paragraph below that matches the ground and delete the others.]
(A) Premature or not in accordance with IRS procedures. [State the procedural defect with dates, e.g. the NFTL was filed on [date] after the taxpayer's bankruptcy petition on [date] while the automatic stay was in effect (case number) / the taxpayer had an undisputed credit from [carryback or overpayment] on [date] that satisfied the liability before filing / the NFTL was filed for a shared responsibility payment / the NFTL was filed while the taxpayer was serving in a combat zone from [date] to [date]].
(B) Installment agreement. The taxpayer entered into an installment agreement on [Date] for the liabilities shown on the NFTL. The agreement [did not provide for the filing of an NFTL / provided for an NFTL only on default, and the taxpayer has not defaulted; all [N] payments have been made on time]. [For the direct debit provision: The agreement is a direct debit installment agreement (ALN ending 03, or bank statements enclosed). The aggregate unpaid balance of assessments was $[amount] at the date of this request, which is $25,000 or less. The agreement will fully pay the liability by [date], within 60 months and before the earliest CSED of [date]. At least three consecutive direct debit payments have been processed, on [dates]. There has been no default under this or any previous DDIA. The taxpayer has had no prior NFTL withdrawal for these periods and is in compliance with all other filing and payment requirements.]
(C) Withdrawal will facilitate collection. [Explain how withdrawal produces more for the government than the NFTL, with evidence, e.g. the taxpayer has been offered employment at $[salary] conditioned on bonding, and the bonding company's letter dated [date] declines coverage because of the NFTL; the taxpayer agrees to a payroll deduction agreement of $[amount] per month on starting work. OR: the taxpayer's lender (letter enclosed) will not finance the replacement of the vehicle the taxpayer uses to earn the income that funds the installment agreement.] The taxpayer agrees that a new NFTL may be filed if the proposed payments are not made.
(D) Best interest of the taxpayer and the United States. The taxpayer consents to the withdrawal and states that it is in the taxpayer’s best interest because [Reason, e.g. the NFTL is preventing issuance of the professional license the taxpayer needs to earn income]. It is in the best interest of the United States because [Reason, e.g. the liability has been fully paid and the lien released on [date]; the taxpayer is in compliance with all filing requirements for the past three years and current on estimated payments; no creditor's position changes because no balance remains]. [If the lien was released: The taxpayer requests withdrawal of the released NFTL under IRC 6323(j)(1)(D) and the IRS procedures for withdrawal after release.]
2. Why other lien remedies would not serve
[Explain why a discharge of specific property or a subordination would not achieve the result, e.g. no specific property transaction is involved; the obstacle is the public record of the notice itself. Delete if ground (A).]
3. Compliance
All required returns for [Years] have been filed. [Estimated tax payments / federal tax deposits for the current year are current.] No new liabilities have accrued since [Date].
4. Authorization to notify creditors (IRC 6323(j)(2))
If the notice is withdrawn, the taxpayer requests that the IRS notify the following credit reporting agencies, financial institutions and creditors, and authorizes release of the withdrawal information to them:
- [Name and address]
- [Name and address]
Please also send a copy of the Form 10916 withdrawal to the taxpayer and to the representative named below.
Enclosures: Form 12277; copy of Form 668(Y); [IA acceptance letter or Form 433-D / bank statements showing direct debits / lender or employer letters / bankruptcy petition and case docket / certificate of release]; Form 2848.
[Signature of taxpayer, or officer with title, or representative under Form 2848] [Date]
Withdrawal versus release, discharge and subordination
A withdrawal removes the Notice of Federal Tax Lien from the public record; IRC 6323(j)(1) says the chapter “shall be applied as if the withdrawn notice had not been filed.” It does not release the statutory lien or reduce the balance; the IRS lien page notes “you are still liable for the amount due.” Release under IRC 6325(a) requires the liability to be satisfied, unenforceable or bonded. See federal tax liens and Form 12277.
The IRM tells employees to ask: “Will a lien subordination or discharge of certain property from the lien achieve the same result as a withdrawal? If so, an NFTL withdrawal is not appropriate.” Section 2 answers that question. For one property being refinanced, Form 14135 for a discharge is usually the right application.
The four grounds and what the IRM checks
| IRC 6323(j)(1) | Form 12277 section 11 box | What IRM 5.12.9 has the reviewer verify |
|---|---|---|
| (A) Premature or not in accordance with administrative procedures | First box | A procedural defect: NFTL filed during the bankruptcy stay (withdrawal mandatory), filed when the employee knew of a credit that satisfied the liability, filed for an SRP assessment, or filed during combat zone service. |
| (B) Installment agreement | Second box (regular IA) or third box (DDIA) | Whether the agreement provided for an NFTL; if it said one would be filed, withdrawal may not be granted under (B). DDIA: assessed balance $25,000 or less, full pay within 60 months and before the CSED, three consecutive debits, no defaults, no prior withdrawal, compliance. |
| (C) Facilitates collection | Fourth box | Whether the IRS will collect more with the notice withdrawn, and whether a bond, discharge or subordination would do instead. Often granted with a provision to refile on default. |
| (D) Best interest of taxpayer and United States | Fifth box | Two determinations: the taxpayer (or the NTA) for the taxpayer, and Collection for the government. Used for withdrawals after release. |
The IRM definition for ground (C) is the test to write to: “A withdrawal facilitates collection if withdrawing the NFTL will result, either immediately or in the future, in a greater amount being collected by the IRS than had the NFTL been maintained.” Its examples approve withdrawal for a taxpayer who cannot be bonded for a job and agrees to payroll deductions; they deny it for a vehicle that does not generate income.
Ground (D) is harder when a balance remains. The IRM’s refinancing examples conclude that “it is not a good business practice nor is it in the best interest of the government to relinquish its secured creditor status in exchange for a promise to pay.” Where the lien has been released, IRM 5.12.9.9 allows withdrawal under (A) or (D); the IRS lien page lists the conditions: liability satisfied and lien released, three years of filing compliance, and current on estimated payments and deposits.
What each section does
The heading block supplies the items IRM 5.12.9.4 says every request must contain: name, current address, TIN, a copy of the NFTL or details about it, a statement of the basis, and the creditor disclosure authorization. Use the name exactly as it appears on the Form 668(Y).
Section 1 names one ground and gives the facts for it. IRM 5.12.9.5 has the employee contact the taxpayer if the wrong provision was cited and the facts fit another, but this “does not mean the employee is required to search for additional reasons to grant a withdrawal.” For a DDIA request, each sentence matches a numbered condition in IRM 5.12.9.3.2.1; if the ALN does not show 03 the IRM asks for bank statements, so enclose them.
Section 3 addresses compliance because the IRM says “A NFTL should not be withdrawn if the taxpayer is not in compliance with filing and deposit requirements.”
Section 4 is the IRC 6323(j)(2) notification. Form 12277 says: “Your request serves as our authority to release the notice of withdrawal information to the agencies, financial institutions, or creditors you have identified.” Since April 2018 the major credit bureaus do not report NFTLs, so the list is usually lenders and licensing bodies.
Signature. IRM 5.12.9.4: “Requests must be signed by the taxpayer or a valid Power of Attorney (POA).” For a business, an officer or the POA signs with title.
Where to send it and what happens next
- If a revenue officer has the case, send the request to that officer. Premature-filing requests can be decided by the revenue officer; all other grounds go through Advisory (IRM 5.12.9.5).
- Otherwise send it to Advisory. Publication 4235 (Rev. 7-2025) routes withdrawal applications to Advisory Consolidated Receipts, 7940 Kentucky Drive, Stop 2850A, Florence, KY 41042-2915, fax 844-201-8382, or through the taxpayer’s Online Account. IRM 5.12.9.4: “A faxed request qualifies as a written request.”
- Advisory contacts you for anything missing within 21 days. The IRM target: “Generally, the recommendation for acceptance or denial should be made within thirty (30) calendar days of a complete request.”
- If granted, the IRS files Form 10916 (or 10916-A after release) with the recording office, sends you a copy and notifies the parties listed in section 4.
- If denied, Letter 4711 explains why and carries CAP rights with Publication 1660 and Form 9423 (IRM 5.12.9.8). See the CAP statement template.
Mistakes that get withdrawals denied
- Citing the DDIA ground with a regular IA. Taxpayers in other agreements “are not eligible for consideration for withdrawal under the conditions specified in this section unless they convert to a DDIA.” Convert first, make three debits, then apply.
- Counting accruals toward the $25,000. The ceiling is the unpaid balance of assessments, which “does not include accrued (i.e., unassessed) penalty and interest.”
- Refiling the same request. The same NFTL, ground and facts get a reply that it was already addressed, with no new CAP rights.
Questions practitioners ask
Does one Form 12277 cover several NFTLs?
It can. IRM 5.12.9.4.1: “Generally, if the conditions and reasons for withdrawal are the same for all the NFTLs, one Form 12277 referencing all the NFTLs is acceptable.” The same NFTL filed in two offices for real and personal property is one request.
Can the IRS withdraw a lien that has already been released?
Yes, under IRC 6323(j)(1)(A) or (D) (IRM 5.12.9.9). Self-released liens are withdrawn under (D) only with extenuating circumstances and Advisory manager approval.
What happens if the client defaults after a DDIA withdrawal?
A new NFTL may be filed if the taxpayer defaults, terminates the DDIA or converts it to a regular agreement (IRM 5.12.9.3.2.1).
Is the withdrawal decision appealable?
Yes, through CAP; see the Collection Appeals Program. CAP is not available to review a decision not to release a lien.
Can TAS help?
Under IRC 6323(j)(1)(D) the National Taxpayer Advocate can make the best interest determination and, if Collection disagrees, may issue a Taxpayer Assistance Order. See the Taxpayer Advocate Service.