I am afraid removing her name from the title at this point is not going to remove the lien. The only way to get rid of that lien at this point is to pay off the debt, or pay all of the value of your wife's interest in the home toward the debt. Talk to a lawyer or former IRS agent about options for reducing and/or negotiating an affordable payment plan on the debt. Good luck!
I agree that a transfer of the home will not be effective to eliminate the lien. However, you may not have to pay back all of the debt owed to the IRS. Did your wife operate the business as a sole proprietorship or as a separate legal entity (LLC or Corporation)? If it was an LLC or corporation then she should be responsible only for the taxes withheld from employees and not paid (i.e the "trust fund" taxes you describe which are typically state and federal income tax and the employee portion of social security and medicare.) She should not be responsible for the social security/medicare match that was an obligation of the LLC or corporation.
If she has some ability to repay then keep in mind that when she makes a voluntary payment to the IRS she can tell them how to apply the payment. In this case she would want them to apply it to those trust fund tax obligations for the oldest quarter.
If she has no ability to repay at this time then you may be able to convince the IRS to put her in "uncollectible" status. This doesn't mean the tax goes away and the interest meter keeps running, but at least they will stop collection activity so that she can try to get back on her feet. In my 18 year experience I have not seen the IRS actually seize and sell a primary residence to recover a lien. So the lien may just sit there like a sponge absorbing future equity.
Finally, she could consider filing a chapter 13 bankruptcy to force the IRS to accept repayment terms of the debt. We have helped hundreds of people in Oregon control the repayment process in this way. Even if you ultimately wish to sell the home you can delay that sale by 3 to 4 years and pay off the IRS then. This type of solution is especially attractive to people with school age children who want to maintain home stability. It is also helpful when the real estate market is down but things are picking up (as they are in Portland).
There are many good insolvency lawyers in Portland and almost all will, like us, provide a no charge consultation. Best of luck to you!
I certainly agree with the other answers, and I would add that the IRS has an Offer in Compromise program that may allow your wife to significantly lower the amount of outstanding taxes due. I would recommend consulting with a local attorney or tax practitioner who has experience doing Offers in Compromise.