Form 12277, Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien, is the IRS's preferred format for asking that a lien notice be withdrawn under IRC 6323(j). The current revision, dated October 2011, fits on one page. The instructions fit on the back.
It is easy to fill out badly. The classic weak application looks like this: the taxpayer checks a box, writes "please withdraw the lien, it is hurting my credit," and signs it. The form is not the argument. Section 12 is.
Before you start, read the four grounds for lien withdrawal. You need to know which ground you are claiming before you pick up a pen.
Do you have to use the form?
No, but you should. Treasury Regulation 301.6323(j)-1(d) says a withdrawal request must be in writing and lists what it must include: your name, current address and taxpayer identification number; a copy of the notice if available; the grounds; a list of any credit reporting agencies, financial institutions or creditors you want notified; and a request to disclose the withdrawal to them. IRM 5.12.9.4 says Form 12277 is preferred, but any written request with the necessary information may be used, and a faxed request qualifies as written.
The form is built around those requirements, which is why it is the safer choice.
Sections 1 and 2: name and identification number
Enter the taxpayer's name and Social Security number or employer identification number "as shown on the Notice of Federal Tax Lien." Use the name exactly as it appears on the recorded notice, even if it contains an error. That is how the IRS will match your application to its records. If the name on the notice is wrong, explain that in section 12.
Section 3: representative or contact person
If someone other than the taxpayer is completing the application, such as a representative, enter that person's name. For a business, enter the name and title of the person making the application. If you are an individual filing for yourself, leave it blank.
If a representative is signing, make sure a valid power of attorney is on file. IRM 5.12.9.4 says requests must be signed by the taxpayer or a valid POA, and for a business, by an appropriate officer or a POA.
Sections 4 through 8: contact information
Current address and phone number for the taxpayer or the representative. The IRS may need to call you for more information, and an application that cannot be followed up on goes nowhere.
Section 9: identify the notice
Attach a copy of the recorded Form 668(Y) if you have it. If you do not, the form asks for the serial number (found near the top of the notice), the date it was filed, and the recording office.
If you have more than one notice, IRM 5.12.9.4.1 says one Form 12277 referencing all of them is generally acceptable when the conditions and reasons are the same for all. The same notice filed in separate locations for real and personal property may be considered under one request. Make it easy: attach every notice, or list every serial number and recording office.
Section 10: current status of the lien
Three boxes: Open, Released or Unknown. The instructions define them. "Open" means a balance is still owed on the liabilities listed on the notice. "Released" means the lien has been satisfied or is no longer enforceable. "Unknown" means you do not know.
If you are unsure, check your transcripts or call the Centralized Lien Operation before you file. The status drives which ground makes sense.
Section 11: the reason
Check the box or boxes that fit:
- The notice was filed prematurely or not in accordance with IRS procedures. This is section 6323(j)(1)(A).
- You entered into an installment agreement to satisfy the liability, and the agreement did not provide for a notice to be filed. This is section 6323(j)(1)(B). A sub-box asks whether you are under a direct debit installment agreement, which ties into the IRS's specific program for balances of $25,000 or less, explained in lien withdrawal through a direct debit installment agreement.
- Withdrawal will facilitate collection of the tax. This is section 6323(j)(1)(C).
- You, or the Taxpayer Advocate acting for you, believe withdrawal is in the best interest of the taxpayer and the government. This is section 6323(j)(1)(D).
The instructions add a pointed note: if you are requesting withdrawal of a released notice, you generally should check the best interest box. That is the route covered in withdrawal after the lien is released.
Section 12: the explanation
This is the application. The instructions ask for "a detailed explanation of the events or the situation to support your reason(s)," with additional sheets and documentation as needed. Write it like you are making a case to a skeptical reviewer, because you are.
Match the explanation to the ground:
| Ground | What to show | What to attach |
|---|---|---|
| Premature or improper | The specific procedure that was not followed, or the fact that made the filing premature | Proof of the credit or payment, bankruptcy filing details, military orders, or other documents showing the problem |
| Installment agreement | The agreement terms and your payment history | The agreement or acceptance letter; proof of payments |
| Facilitate collection | How withdrawal increases what the IRS collects, with numbers | Job offer conditioned on bonding, loan denial letter citing the lien, financial projections |
| Best interests | Why withdrawal helps you and does not hurt the government | Proof of full payment and release; proof that required returns are filed |
Keep in mind what the IRS weighs. IRM 5.12.9.3.3 says a notice should not be withdrawn to facilitate collection if you are not in compliance with filing and deposit requirements, and that if a subordination or discharge would achieve the same result, withdrawal is not appropriate. Address both points head on.
Five quick checks before you mail it
- The name and identification number match the recorded notice exactly.
- Every notice you want withdrawn is attached or identified by serial number and recording office.
- The status box matches your transcripts.
- The ground you checked matches the explanation you wrote.
- Your list of credit agencies and creditors to notify is attached, with addresses.
The affirmation
You sign under penalties of perjury that the application and attachments are true, correct and complete. Treat that seriously. A request built on an exaggerated story is worse than no request.
Where to send it
The instructions say to mail the application to the IRS office assigned to your account. If your account is not assigned, or you are not sure where it is assigned, mail it to the Advisory Group Manager for the area where you live or where the business has its principal place of business. Publication 4235 lists the Collection Advisory Group addresses.
Third-party notifications
Section 6323(j)(2) requires the IRS, on written request, to make reasonable efforts to notify credit reporting agencies and any financial institution or creditor you name. The form's instructions say your request must be in writing and list the names and addresses of the agencies, institutions or creditors you want notified, and that the request serves as authority to release the withdrawal information to them. Put that list on an attached sheet. If you need more copies later, the instructions say to send a written request to the Advisory Group Manager with your identifying information, a copy of the withdrawal if available, and a supplemental list.
What happens next
The instructions say the IRS may ask for more information. If the IRS approves, it files Form 10916(c), Withdrawal of Filed Notice of Federal Tax Lien, in the recording office where the original notice was filed and sends you a copy. If it denies the request, it notifies you and explains your appeal rights. IRM 5.12.6.4 says a denial of a withdrawal request can be appealed through the Collection Appeals Program.
The form asks what happened. Answer with documents, not adjectives.