On February 24, 2011, the IRS Commissioner announced that for unpaid assessments of $25,000 or less, the IRS will grant lien “withdrawals” for taxpayers entering into a Direct Debit, Installment Agreement.
It is essential to understand the difference between lien “withdrawal” and lien “release.” The “release” of a federal tax lien extinguishes not only the lien itself, but also automatically extinguishes the underlying liability. A “withdrawal” of a notice of federal tax lien withdraws public notice of the lien, but does not extinguish the underlying tax debt.
The reason why a withdrawal is significant is because it may instantly raise your credit score helping you get a loan or get a loan with a better interest rate. Liens will be “withdrawn” after a probationary period demonstrating that direct debit payments will be honored.
Direct Debit Installment Agreements are not without risk. If adequate funding does not exist in the account with which will be debited, then you will default on your installment agreement which will result in adverse consequences.
If you are facing an issue with the IRS regarding a lien, or an installment agreement, contact tax attorney Todd S. Unger at (877) 544-4743.