IRS Form 12277 “Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien” Explained

IRS Form 12277, Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien, asks the IRS to withdraw a public Notice of Federal Tax Lien (NFTL). A withdrawal removes the public notice as if it had never been filed. That’s different from a release, which only shows that the lien has been satisfied.

Withdrawal vs. Release

• Release (IRC 6325(a)): happens within 30 days after the debt is paid in full or becomes unenforceable. The original NFTL stays in the public record, marked released.
• Withdrawal (IRC 6323(j)): removes the NFTL from the public record. It can be requested before or after the debt is paid. The IRS will also notify credit agencies and lenders you name.

When the IRS Can Withdraw a Lien Notice

Under IRC 6323(j), the IRS may withdraw an NFTL when:

1. The notice was filed prematurely or not in accordance with IRS procedures
2. You entered into an installment agreement, unless the agreement provides otherwise
3. Withdrawal will help the IRS collect the tax
4. Withdrawal is in your best interest and the best interest of the United States, as determined with input from the National Taxpayer Advocate

Common Withdrawal Paths

• Direct debit installment agreement: if you owe $25,000 or less (or pay down to that amount), are in a direct debit installment agreement, have made three consecutive payments, and are current on filing and payments, you may qualify for withdrawal while still paying.
• After the lien is released: if the debt is paid and the lien released, you may qualify for withdrawal if you’ve been compliant for the past three years (filed all returns and paid all taxes) and are current on estimated payments and federal tax deposits.
• Converting an installment agreement: taxpayers who convert a regular agreement to direct debit may also qualify after the required payments.

Completing Form 12277

• Your name, address and taxpayer identification number
• A copy of the NFTL, or the lien serial number and where it was recorded
• The reason for withdrawal, checking the applicable 6323(j) basis, with a short explanation and supporting documents
• The names and addresses of credit agencies, lenders or others you want notified

Mail it to the IRS Advisory office for your area, listed in Publication 4235. If the request is denied, you can appeal through the Collection Appeals Program.

Why It Matters

Credit bureaus no longer include tax liens on credit reports, but a recorded NFTL still appears in public records and title searches and can affect a sale, refinance or business loan. Related: Form 14135, Lien Discharge and Form 14134, Lien Subordination.

Get Help From Diehl CPA

IRS collection and appeal procedures have strict deadlines, and what you submit becomes part of the record. Diehl CPA, led by Mark Diehl, CPA, CFE, represents taxpayers before the IRS and can prepare the forms, gather the documentation, and deal with the IRS for you. Learn about our tax relief services or contact us to talk through your situation.

This article is general information, not tax or legal advice for your specific situation. Updated October 2026.