In certain situations, the IRS may withdraw a public notice of tax lien prior to the taxpayer paying the liability in full. Some of these situations include:
1. The filing of the notice was premature or otherwise not in accordance with the administrative procedures of the IRS.
2. The taxpayer has entered into an installment agreement with the IRS to pay off the liability.
3. The withdrawal will allow the taxpayer to pay the liability.
4. The taxpayer or the Taxpayer Advocate consents and the withdrawal would be in the best interest of the taxpayer and the IRS.
In most cases, the tax lien will be withdrawn after the liability is paid in full. Once this happens, credit reporting agencies will receive a notice of the withdrawal and in most cases they will delete any reference to the tax lien on the taxpayer’s credit history.
While the credit agencies note the filing of the release in the taxpayer’s credit history, the filing of the release does not operate to remove the references to the tax lien from the taxpayer’s credit history. A released Notice of Federal Tax Lien typically remains on the taxpayer’s credit history for seven years after it has been released.