The federal tax lien, which is sometimes called the "statutory lien," is the basis for the government’s claim against the taxpayer’s property, including current and future rights to property.

While the federal tax lien is the bedrock of all collection actions and protects the government’s interest in litigation, a Notice of Federal Tax Lien (NFTL) is needed for the federal tax lien to compete with certain classes of creditors. The NFTL is filed in the public record to put third parties on notice of the government’s outstanding lien against the taxpayer’s property and rights to property.

According to IRC 6325(a), the NFTL cannot be released until the tax liability has been satisfied or has become legally unenforceable, or a bond has been provided to secure the liability.

Under IRC 6323(j), the IRS may withdraw the NFTL from the public record at any time if certain conditions are met.

The authority for NFTLs are found in the following code and regulation sections.

The following Policy Statements and Delegation Orders regulate NFTL filing.

The Director, Collection Policy is responsible for overseeing policy and procedures regarding NFTLs.

Employees authorized to make determinations regarding specific lien actions are responsible for ensuring procedures are properly followed.

Managers are responsible for ensuring employees are duly delegated to perform lien actions and that they are in accordance with policy and procedures.

The Centralized Lien Operation (CLO) has primary responsibility for inputting information to, and processing lien documents generated by, the Automated Lien System (ALS).

Other roles and responsibilities related to the lien program can be found in IRM 5.12.1.5, IRS Organizations Working Lien Issues and its subsections.

IRM 5.12.1.6, Locations of IRM 5.12 Content, identifies IRM locations associated with NFTL determinations, filing, withdrawal, maintenance, and release. It is within the specific IRM sections that lien program responsibilities, instructions, and procedures are identified.

The Automated Lien System (ALS) electronically stores data regarding NFTLs.

NFTL activity is reviewed and documented in numerous ways, including those shown on the following chart.

IRM 1.2.2.6.4, Delegation Order 5-4 (Rev. 3), Federal Tax Lien Certificates, stipulates the IRS positions authorized for lien activities. Generally, NFTL withdrawals must be approved by management.

NFTLs are created and maintained through ALS. The Centralized Lien Operation (CLO) is primarily responsible for updating and maintaining ALS data.

Access to systems used in the NFTL process is controlled following standard access guidelines through the Online 5081 (OL5081).

There are numerous reports to monitor NFTL filings and ALS activity. (See ALS User Guide, Chapter 15, Logs and Reports, for a complete listing of ALS reports.)

For closed records associated with NFTLs, see Document 12990, Records Control Schedules, the Tax Administration - Collection (RCS 28), in PART IV - Delinquent Accounts, Delinquent Returns, And Office Services Records, Item 43, Notice of Federal Tax Lien and Certificate of Release of Federal Tax Lien.

The table below lists key terms used in this section.

The table below lists common acronyms used in the lien program and throughout this IRM.

See IRM 5.12.1-2, Glossary of Common Acronyms in IRM 5.12, for a listing of other common terms and acronyms used in the federal tax lien program.

For purposes of this IRM section, the term “taxpayer” is used for the person requesting the NFTL withdrawal and includes the taxpayer that owes the tax liability covered by the NFTL; an official of the business entity that owes the tax liability covered by the NFTL; a third party directly impacted by the NFTL; or an authorized Power of Attorney (POA) of the aforementioned persons.

The form used to provide notice of the lien is Form 668(Y), Notice of Federal Tax Lien. The form, when properly annotated, is also used for NFTL variations, including amended and special condition NFTLs.

The form filed to show the NFTL is withdrawn is Form 10916, Withdrawal of Filed Notice of Federal Tax Lien, or Form 10916-A, Withdrawal of Filed Notice of Federal Tax Lien after Release.

IRM 5.17.2, Legal Reference Guide for Revenue Officers, Federal Tax Liens, provides additional details about lien law such as the types of property subject to the federal tax lien and the priority of the federal tax lien versus other competing encumbrances.

IRM 5.12.1, Lien Program Overview, provides additional information, websites, and job aids related to the lien program.

Links to tools and references to assist IRS employees with lien processes may also be found on the My SB/SE website. Similar information for taxpayers may be found on the Understanding a Federal Tax Lien page on IRS.gov, including a video explaining the NFTL withdrawal application process.

Taxpayer rights with regard to IRS processes are stipulated in IRC 7803(a)(3) and referenced throughout this IRM.

This IRM is for procedural use and does not provide detailed instruction on the use of any system. User Guides should be consulted, as necessary.

Pursuant to IRC 6323(f), the IRS files NFTLs in public recording offices designated by state law. The IRS does not file NFTLs with private entities.

Historically, credit reporting agencies included NFTLs from the public record on taxpayers’ personal credit reports. Effective April 2018, the major credit reporting agencies stopped this practice and removed existing NFTLs from taxpayers’ credit reports. This move was an extension of the National Consumer Assistance Plan, which the credit reporting agencies enacted in 2015.

Whether the credit reporting agencies include or exclude them on personal credit reports, NFTLs remain of public record and retain their effectiveness under IRC 6323. Consequently, a third party still might use an NFTL when evaluating the financial situation of the taxpayer. The policies and procedures of the lien program, as defined in this and other IRM 5.12 sections, remain in effect. Withdrawal requests will continue to be processed and evaluated based on their specific merits.

A NFTL may be withdrawn if the filing was premature or otherwise not in accordance with administrative procedures (IRC § 6323(j)(1)(A)).

Withdrawal of the NFTL is mandatory when the NFTL is filed in violation of the automatic stay in bankruptcy.

If the NFTL is filed when the taxpayer is in a Combat Zone, is in the active military outside the United States away from his or her permanent duty station participating in a contingency operation, or hospitalized for an injury received while serving in the combat zone or contingency operation, the Notice of Federal Tax Lien should be withdrawn. (See IRM 5.1.7.9, Accounts of Taxpayers Who Serve in a Combat Zone, for further details on Combat Zone restrictions.)

A NFTL inadvertently filed for a Shared Responsibility Payment (SRP), shown on IDRS as MFT 35 or mirrored assessment MFT 65, must be withdrawn. SRP assessments are not subject to the filing of an NFTL.

When the person filing an NFTL knows or should have known about available credits as in example 1 above, the NFTL should be withdrawn.

Even though filing of the NFTL may have been premature or otherwise not in accordance with the IRS’ administrative procedures, a withdrawal may not always be appropriate. Generally, the NFTL should not be withdrawn if a new NFTL will be immediately filed after withdrawing the NFTL.

In situations where an NFTL was inadvertently filed in duplicate, issue Letter 2440, Certificate of Duplication of Federal Tax Lien. (See IRM 5.12.7.10.4, Duplicate NFTL.) A withdrawal of the duplicate NFTL may be considered if requested by the taxpayer, but caution should be taken so that only the duplicate filing of the NFTL is withdrawn.

Requests stating the NFTL was erroneous, as defined by IRC § 6326, should first be considered for release following procedures in IRM 5.12.3.9, Erroneously Filed Notice of Federal Tax Lien.

A NFTL may be withdrawn if the taxpayer has entered into an installment agreement to satisfy the liability for which the lien was imposed, unless such agreement provides otherwise (IRC § 6323(j)(1)(B)).

Consider the following in determining whether the filing should be maintained.

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 (IRC § 6323(j)(1)(C)).

To determine if withdrawal of the NFTL will facilitate collection of the tax liability, consider all relevant case factors, including, but not limited to, the following list.

A determination that withdrawal will facilitate collection may originate with a Revenue Officer in the course of making a collection determination. Although a written request by the taxpayer for the withdrawal is not needed in such a circumstance, the taxpayer must concur that the withdrawal is in their best interest.

When the taxpayer's account is not assigned to another IRS work unit and it is determined that withdrawal of the NFTL will facilitate collection, the Advisory employee should secure the taxpayer's proposal to pay the balance of the tax liability (or evidence of such a proposal to another function) and make a determination on the proposal's collection impact along with the recommendation for acceptance/denial of the request.

To be considered for a withdrawal under the best interest provisions (IRC § 6323(j)(1)(D)), two determinations are required:

A determination that withdrawal is in the best interest of the United States may be made by collection employees.

A taxpayer may request the withdrawal on the basis that it is in his or her best interest and the best interest of the United States without specifically requesting that the NTA make the determination on his or her behalf. A collection employee may also make a best interest determination independent of a taxpayer request provided the taxpayer or the NTA acting on behalf of the taxpayer consents to the withdrawal.

This IRM cannot address every scenario you may encounter. Apply your knowledge and experience to evaluate the case facts and use your judgment in making a determination. In making "best interest" determinations consider issues such as the following:

When making the best interest determination the expectation is that the government and the taxpayer will benefit from withdrawal of the notice.

Generally, withdrawal requests should be considered on an NFTL by NFTL basis; however, there may be situations in which multiple NFTLs may be covered by the same request. For instance, under the premature filing provision, a taxpayer requests withdrawal of a specific NFTL whereas under the best interest provisions, the taxpayer may want consideration for all NFTLs together.

Consider taxpayer burden when providing guidance for completing Form 12277. 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 separate locations for real and personal property may be considered under one request.

Withdrawal certificates should be prepared through ALS; however, if the taxpayer requests an immediate issuance of the certificate for an imminent circumstance, the certificate may be manually prepared.

Prepare Form 10916, Withdrawal of Filed Notice of Federal Tax Lien, using the ICS template or PDF fillable form from the intranet. Data on the Form 10916 should match the data shown on the NFTL.

Manually prepared forms must be signed by a delegated approving official.

Provide the manually prepared certificate to the taxpayer (or POA, if applicable) for recordation along with Letter 4026, Notice of Lien Withdrawal. Advise the taxpayer of the filing process and that they are responsible for paying any recording fee.

Notify CLO of the issuance of the withdrawal by forwarding a copy of the withdrawal certificate or completing Form 13794-W. Make sure to indicate that the certificate was already issued so that ALS can be updated accordingly.

Retain a copy of any manually prepared withdrawal forms in the case file.

Request input through normal channels of a TC 583 with the appropriate definer code to each module on the certificate.

Neither the Internal Revenue Code (IRC) nor Treasury regulations address the method in which lien certificates are to be signed; however, they both address the Secretary’s authority to develop procedures associated with the use and acceptability of electronic signatures on forms and other documents.

Approval of documents must always be in accordance with Delegation Order 5-4. (See IRM 1.2.2.6.4, Delegation Order 5-4 (Rev. 3), Federal Tax Lien Certificates.)

Manually prepared withdrawal certificates and their related letters and forms may be signed by the approving official via electronic means when a physical signature is not feasible.

To sign a document electronically, the document must be converted to a Portable Data Format (PDF) using Adobe Acrobat and the approving official must create a signature file. The format of the electronic signature should adhere to certain standards.

Approval must be granted on a case by case basis. The case history must be documented by the approving official to indicate the electronic or facsimile signing of the lien certificate and associated correspondence.

A printed copy of the electronically signed certificate must be retained as part of the case file for appropriate record keeping.

There may be hesitation from some recording offices to accept electronically signed lien certificates; however, they cannot refuse to record the documents as the IRS dictates the form and content of lien certificates. Recording offices may be referred to Publication 1468, Guidelines for Processing Notice of Federal Tax Lien Documents, for more information.

Facsimile signatures must be protected in accordance with established IRS procedures.

After inputting the withdrawal information into ALS, Form 10916, Withdrawal of Filed Notice of Federal Tax Lien, or Form 10916-A, Withdrawal of Filed Notice of Federal Tax Lien After Release, as applicable, is generated and distributed.

The IRS usually bears the cost of filing the withdrawal certificate. However, in situations where the taxpayer requests immediate issuance and the document is provided directly to the taxpayer for filing, the taxpayer bears the cost of filing.

When appropriate, the approving office requests abatement of the filing fee for the original NFTL (TC 360) following standard IDRS adjustment procedures. (See IRM 5.12.9.6.5, Abating the NFTL Filing Fee.)

A facsimile copy of the withdrawal is available through ALS. Copies of the withdrawal form are not returned by CLO to the requestor unless specifically requested.

Withdrawal documents, including partial withdrawals, should be generated through ALS. However, in situations where immediate issuance of the withdrawal is needed, the approving office manually prepares Form 10916 and secures the approving official's signature. (See IRM 5.12.9.6.1, Manual Preparation of Withdrawal Certificates.)

The withdrawal document should be issued to the recording office (or the taxpayer, if manually prepared) within fifteen (15) calendar days after approval.

Pursuant to IRC § 6323(j)(2), taxpayers may request additional copies of the withdrawal form to be sent to specified third parties. These requests might be received with the initial withdrawal request or after the withdrawal is issued. The requests must be in writing from the taxpayer and provide the following information:

Requests for third party notifications should be worked by the employee assigned the case or the approving office that issued the withdrawal.

Facsimile copies of the withdrawal may be obtained through ALS using the normal facsimile print option. If necessary, a copy of the Form 10916 may be requested through CLO. Copies of the withdrawal cover letter are not available through CLO and are not needed.

Use Letter 5046, Withdrawal Third Party Cover Letter, to send the copy of the withdrawal to the specified third party. If Letter 5046 is not available, a general cover letter prepared by the employee may be used. The letter should only contain basic information confirming the issuance of the withdrawal. The letter should not elaborate on the reason for the withdrawal nor provide any other information regarding the taxpayer's account, unless specifically requested and authorized by the taxpayer.

Document actions taken on the request. Control the request on ICS or AIS, as appropriate.

When an NFTL is withdrawn because it was inadvertently or prematurely filed (IRC § 6323(j)(1)(A)), abate the filing fee posted to the taxpayer's account for the NFTL (TC 360).

It is the responsibility of the office approving the withdrawal to request abatement of the NFTL filing fee. Follow standard procedures for IDRS adjustments when requesting the abatement.

When an NFTL is withdrawn for any reason other than inadvertent or premature filing, do not abate the NFTL filing fee.

Under IRC § 6320(b)(2), a taxpayer is entitled to only one hearing with respect to each tax period identified on an NFTL. Even if the NFTL is withdrawn, the original CDP lien notice conveying the taxpayer appeal rights is valid. If a new NFTL is subsequently filed, the IRS may not offer the taxpayer any additional opportunity to request a CDP hearing for the same tax period unless the original CDP lien notice has been rescinded.

The IRC neither expressly prohibits nor provides for rescission of a notice of a right to a hearing under section 6320. In general, the IRS has the authority to rescind a section 6320 notice but such authority is limited.

The IRS may rescind a CDP notice only if all the following are true:

The deadline for the time period to request a hearing is generally within forty-five (45) days of the TC 582 date shown on IDRS. If the withdrawal is being worked within that time frame, the exact deadline date must be found to make a determination on the rescission. The deadline date is stated on the Letter 3172, Notice of Federal Tax Lien Filing and Your Rights to a Hearing Under IRC 6320, or shown on ALS. If access to ALS or the letter is not available, contact the CLO and request a facsimile copy of the Letter 3172.

If the NFTL is being withdrawn because it was filed in violation of the bankruptcy automatic stay, the CDP notice may be rescinded if the limitations described above are met.

If the conditions for rescission are met, contact the employee/function that requested the NFTL or check the case history to confirm that the taxpayer has not requested a CDP hearing. If the taxpayer has requested a hearing, the CDP rights cannot be rescinded. The request must be forwarded and resolved by Appeals.

If rescinding the CDP notice is appropriate, advise the taxpayer by issuing Letter 4711, Withdrawal Decision. Ensure that the box regarding the rescission is checked.

After sending the Letter 4711 hold the case open for sufficient time to see if a "last minute" CDP request was submitted by the taxpayer. In the event a CDP hearing request is received after the Letter 4711 is issued, check the dates to see which was mailed first. If the taxpayer’s request pre-dates the Letter 4711, the CDP rights cannot be rescinded.

After verifying that no CDP request was submitted, or that the hearing request was mailed after the date of the Letter 4711, reverse the TC 971 AC 252 on each module on the withdrawn NFTL.

Document the history regarding the rescission.

The IRS is not required to rescind a CDP notice if the NFTL is ineffective (e.g., "lost lien" ).

Taxpayers have the right to appeal a withdrawal denied by the approving office or ask for a withdrawal during other CAP situations pertaining to the NFTL. The issue of withdrawal may also arise if the taxpayer appeals the filing of the NFTL under CDP.

Appeals has the authority to make determinations regarding NFTL withdrawals using the same criteria as Collection. Procedures for Appeals' determinations on notices of lien can be found in IRM 8.22.7.9.1, NFTL Withdrawals.

Once a case is in Appeals, the responsibility for the decision to withdraw rests with Appeals. Contact with Appeals while the case is open is strictly limited by Rev. Proc. 2012–18 in order to avoid prohibited ex-parte communication. (See IRM 5.1.9.5, Communications with Appeals, for further details on acceptable communications with Appeals.)

Upon a decision, Appeals issues either a decision (for CAP and equivalent hearing requests) or a determination letter (for CDP requests) to the taxpayer. If an NFTL withdrawal must be issued, Appeals notifies Collection.

The approving office reviews and processes Appeals’ determination in accordance with IRM 5.1.9, Collection Appeal Rights.

The approving office requests the input of the withdrawal within five (5) business days. If the approving office fails to timely process the request, Appeals may use their delegated authority under IRM 1.2.2.6.4 to bypass the approving office and send the request directly to CLO.

To process requests for withdrawal after release, follow the procedures in IRM 5.12.9.5, Processing Withdrawal Requests, through IRM 5.12.9.11, Documentation Requirements for Lien-Related Certificates, with the exceptions noted in this subsection.

Since the liabilities associated with the released lien have been satisfied, assignment of the request is based on whether the taxpayer owes other liabilities. If the taxpayer has other balance due modules, the request should be reviewed by the Collection field employee assigned to those modules. If the taxpayer owes no other modules or the case is not assigned, the request usually should be forwarded to Advisory for review.

The authority to approve withdrawals after release is found in IRM 1.2.2.6.4, Delegation Order 5-4 (Rev. 3), Federal Tax Lien Certificates.

Use Form 13794-W to request a post-release withdrawal through ALS.

Use Letter 3044, Withdrawal After Notice of Lien Release, to send a copy of the withdrawal after release to the taxpayer. For withdrawals generated through ALS, this letter is printed at CPS.

Since this withdrawal occurs after the original tax liability was satisfied, no adjustments are made to the taxpayer’s account to abate the Transaction Code (TC) 360 lien fees previously assessed. Also, no additional filing fee is charged to the taxpayer’s account for the cost of the withdrawal filing.

ALS retains records of NFTLs for five years after release. After that time the records are purged from the system. Occasionally, a request may be received for withdrawal of an NFTL that is no longer on ALS.

Ask the taxpayer to provide a copy of the NFTL that was filed. Explain that it is not on our computer system and we need to have a copy of the originally filed NFTL in order to work the withdrawal request.

Upon receiving a copy of the document, verify it is an NFTL and not some other type of lien.

Make a determination if withdrawal after lien release is appropriate by following IRM 5.12.9.9, Request for NFTL Withdrawal After Lien Release.

Manually prepare Form 10916-A and Letter 3044 using the ICS template or the PDF fillable version from the intranet.

Send the manual withdrawal to CLO and ask them to file the withdrawal in the appropriate recording office. In doing this, include a message to CLO advising them that the NFTL is no longer on ALS and therefore the withdrawal does not need to be added to the system. CLO handles payment of the cost of recordation.

Send a copy of the withdrawal and cover letter to the taxpayer.

Control the case and document actions related to the request on ICS or AIS, as appropriate.

Keep original or copies of all documents that relate to investigations of lien certificate applications. Specifically, keep the following in the case file during investigation of applications, and after the investigation is complete:

Maintain documentation in an orderly manner so it may be consulted if further actions are necessary on the case.

Retain files as specified in Document 12990, Records and Information Management Records Control Schedules.