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
While an NFTL remains filed, it is a public notice. Withdrawal removes that public notice and means the IRS is no longer competing with other creditors for the property, but it does not erase the underlying tax liability or guarantee any private credit, financing, rental, or property decision.
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.