Direct answer
Withdrawal changes the public filing, not the underlying liability. The IRS explains that a withdrawal removes the Notice of Federal Tax Lien and its effect against other creditors, while the taxpayer remains responsible for the amount due.
Withdrawal and release are different
A withdrawal removes the NFTL from the public record. A release extinguishes the federal tax lien after the liability is fully paid, payment is guaranteed by a bond, an accepted offer in compromise is satisfied, or the collection period expires. A released notice may later qualify for withdrawal under separate compliance rules.
Collection can continue
If a balance remains, interest and applicable penalties can continue. The IRS may still use lawful collection actions, and the taxpayer must keep an installment agreement current. Form 12277 does not create an automatic levy hold or extend a Collection Due Process deadline.
Why withdrawal may still matter
The NFTL remains a public record even though the major consumer credit bureaus stopped including tax liens on personal credit reports in 2018. Lenders, landlords, suppliers, title professionals, and other third parties may still find the filing. Withdrawal can remove the notice and the IRS's public priority claim, which may facilitate financing or collection, but it does not guarantee a loan, credit decision, property transaction, or other private outcome.
What the IRS files after approval
If the IRS approves the request, it files a withdrawal document with the same recording office and sends a copy to the taxpayer. The taxpayer may also ask in writing for the IRS to notify named financial institutions, creditors, or credit reporting agencies.
What to do next
Use Form 12277 for the withdrawal request and identify the correct statutory basis. If the debt is paid but a release was not recorded, contact the Centralized Lien Operation about a release. If a denial arrives, follow its Collection Appeals Program instructions immediately. If a separate NFTL filing notice offers a CDP hearing, protect that date independently.