Pub 783

Instructions on how to apply for a

Certificate of Discharge of Property From Federal Tax Lien
Before applying for a certificate of discharge,
determine how much you owe in order to pay the
lien(s) in full. You may obtain a payoff by calling
1-800-913-6050 or by visiting the nearest IRS
Taxpayer Assistance Center. If the amount you
expect to get from the sale of your property is
enough to full pay the amount you owe, we will
usually not issue a certificate of discharge.

3. Attach a copy of each notice of Federal tax
lien, or furnish the following information as it
appears on each filed Notice of Federal Tax
Lien:
a. The name of the Internal Revenue Office;
b. The name and address of the taxpayer
against whom the notice was filed;

There is no standard form available for an
application for a Certificate of Discharge of
Property from a Federal tax lien, a computergenerated request will be considered as an
application (please no handwritten request).
Submit your request and all accompanying
documents in duplicate to:

c. The serial number shown on the lien;
d. The taxpayer social security number or
employer identification number shown on
the lien; and
e. The date and place the notice was filed.
4.

In lieu of the above, a preliminary title report
may be substituted listing the required information.

5.

List the encumbrances (or attach a copy of the
instrument that created each encumbrance) on
the property, which you believe have priority
over the Federal tax lien. For each encumbrance show:
a. The name and address of the holder.

IRS, Attn: Technical Services Group Manager
(Address to the IRS office in which the lien was filed.
Use Publication 4235, Technical Services Addresses, to
determine where to mail your request).

Information Required on Application
Give date of the application.

b. A description of the encumbrance.

Give the name and address of the person
applying under section 6325(b) of the Internal
Revenue Code, for a certificate of discharge. See
the “Additional Information” section of this publication for applicable Internal Revenue Code sections.
Give the name and address of the taxpayer, and
describe the property as follows:
1. Give a detailed description, including the location of the property for which you are requesting the certificate of discharge. If real property
is involved, submit a legible copy of the title or
deed to the property, and the complete address
(street, city, state and ZIP code). If the certificate is requested under section 6325(b)(1),
also give a description of all the taxpayer’s
remaining property subject to the lien.
2. Show how and when the taxpayer has been or
will be divested of all rights, title and interest in
and to the property for which a certificate of
discharge is requested.

c. The date of the agreement.
d. The date and place of the recording, if any.
e. The original principal amount and the
interest rate.
f.

The amount due as of the date of the application, if known (show costs and accrued
interest separately); and

g. Your family relationship, if any, to the
taxpayer and to the holders of any other
encumbrances on the property.
6.

In lieu of the above, a preliminary title report
may be substituted listing the required information.

7.

Itemize all proposed or actual costs, commissions and expenses of any transfer or sale
associated with the property. In lieu of the
above, a proposed closing statement, also
known as a preliminary Form HUD-1, may be
submitted.

8.

Furnish information to establish the value of
the property. If the certificate is requested
under section 6325(b)(1) furnish an estimate
of the fair market value of the property, which
will remain subject to the lien. In addition,

12. As discussed further below under “Additional
Information,” making an application and deposit
(or providing a bond) under section 6325(b)(4)
provides a judicial remedy not available for an
application and payment made under section
6325(b)(2). Therefore, unless the right to make
a deposit under section 6325(b)(4) is waived in
writing, an application made by a third party
owner of property will be treated as one made
under section 6325(b)(4), and any payment
made will be treated like a deposit under
section 6325(b)(4).

a. If private sale – Submit written appraisals
by two disinterested persons qualified to appraise the property, and a brief statement of
each appraiser’s qualification.
b. If public sale (auction) already held –
Give the date and place the sale was held,
and the amount for which the property was
sold.

If you are an owner of property (other than
the taxpayer) and you wish to submit an
application under section 6325(b)(2), you
must waive the rights that would be available if the application were made under
section 6325(b)(4). Add the following language to the application immediately prior to
the declaration described in paragraph 15,
below: “I understand that an application and
payment made under section 6325(b)(2) does
not provide the judicial remedy available under
section 7426(a)(4). In making such an application/payment, I waive the option to have the
payment treated as a deposit under section
6325(b)(4) and the right to request a return of
funds and to bring an action under section
7426(a)(4).”

c. If public sale (auction) to be held – Give
the proposed date and place of the sale,
and include a statement that the United
States will be paid in the proper priority from
the proceeds of the sale.
9.

Give any other information that might, in your
opinion, have bearing upon the application,
such as pending judicial actions.

10. The Technical Services Group Manager may
request that you furnish additional information.
11. If you are submitting the application under the
provisions of section 6325(b)(3), dealing with
the substitution of proceeds of sale, attach a
copy of the proposed agreement containing the
following:
a. The name and address of the proposed es
crow agent.

13. Give the name, address and telephone number
where you may be reached.

b. The caption, type of account, name and
address of depositary for the account.

14. Give the name, address and telephone number
of your attorney or other representative, if any.

c. The condition under which the escrowed
funds are to be held.

15. If you have made an application under section
6325(b)(4) and disagree with the Service’s
determination of the value of the government’s
interest, you should provide the Service with
specific reasons why you disagree with it’s
determination.

d. The conditions under which payment will be
made from escrow, including the limitation
for negotiated settlement of claims against
the fund.

16. Make the following declaration over your
signature and title: “Under penalties of
perjury, I declare that I have examined this
application, including any accompanying
schedules, exhibits, affidavits, and statements
and to the best of my knowledge and belief it is
true, correct, and complete.”

e. The estimated costs of the escrow.
f. The name and address of any other party
you and the Technical Services Group
Manager determine to be a party to the
escrow agreement.
g. Your signature, and those of the escrow
agent, the Technical Services Group
Manager and any other party to the escrow
agreement; and
h.

Additional Information
Please follow the instructions in this publication
when applying for a Certificate of Discharge of
Property from Federal Tax Lien.

Any other specific information the Technical
Services Group Manager requests.
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Section 6325(b)(4) – A discharge may be issued to
third parties if a deposit is made or an acceptable
bond is furnished in an amount equal to the value of
the government’s interest in the property. In the
case of former entireties property, a deposit of onehalf the value of the property or a bond equal to
one-half of the value of the property will be determined to be the government’s interest. An owner of
property (other than the taxpayer) who makes a
deposit or furnishes a bond and obtains a discharge
under section 6325(b)(4) has, under section
7426(a)(4), 120 days after the discharge to file an
action in federal district court challenging the
Service’s determination of the government’s lien
interest.

The Technical Services Group Manager has the
authority to issue a certificate of discharge of a lien
that is filed on any part of a taxpayer’s property
subject to the lien. The following sections and
provisions of the Internal Revenue Code apply:
Section 6325(b)(1) – A specific property may be
discharged; if the taxpayer’s property remaining
subject to the lien has a Fair Market Value (FMV)
which is double the sum of: a) the amount of the
liability secured by such liens, and b) all other liens
which have priority over the federal tax lien(s).
(FMV=(a+b)x2)
Section 6325(b)(2)(A) – If there is paid in partial
satisfaction of the liability secured by the lien an
amount determined to be not less than the value
of the interest of the United States in the property
to be discharged. In the case of entireties property
sold, if only one spouse is liable for the tax, the
United State’s must generally be paid one-half of
the proceeds in partial satisfaction of the liability
secured by the tax lien.

This is the exclusive remedy available to the
third party for the return of the deposit or
accepted bond or a portion thereof. An administrative request for refund and a refund suit in
district court is not available. See section
7426(a)(4).

NOTE: Because making an application and deposit
(or providing a bond) under section 6325(b)(4)
provides a judicial remedy not available for an
application and payment made under section
6325(b)(2), owners (other than the taxpayer)
wishing to apply for a certificate of discharge under
this provision must waive, in writing, their rights to
make a deposit allowed under Section 6325(b)(4)
and to file suit for return of the deposit or accepted
bond allowed under section 7426(a)(4). Unless the
waiver has been provided in writing, the Service will
treat an application made by an owner of the
property (other than the taxpayer) as an application
made under section 6325(b)(4), with all funds
treated as a deposit.
Other than the judicial review available under the
deposit/bond procedures under sections 6325(b)(4)
and 7426(a)(4), there is no remedy available to the
third party for the return of payment (or portion
thereof). An administrative request for refund and a
refund suit in district court is not available.
Section 6325(b)(2)(B) – It is determined that the
interest of the United States in the property to be
discharged has no value.
Section 6325(b)(3) – If the property subject to the
lien is sold, and, under an agreement with the
Internal Revenue Service, the proceeds from the
sale are to be held as a fund subject to the liens and
claims of the United States in the same manner and
with the same priority as the liens and claims on the
discharged property.

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1.

No payment is required for the issuance of a
certificate under section 6325(b)(1) or
6325(b)(2)(B) of the Internal Revenue Code.
Payment is required for certificates issued
under section 6325(b)(2)(A). Do not send the
payment with your application. The Technical
Services Group Manager will notify you after
determining the amount due.

2.

The Technical Services Group Manager will
have your application investigated to determine
whether to issue the certificate and will let you
know the outcome.

3.

A certificate of discharge under section
6325(b)(2)(A) will be issued upon receipt of the
amount determined to be the interest of the
United States in the subject property under the
Federal tax lien. In the case of entireties property sold by the taxpayer or taxpayer spouse,
the Service’s interest will generally be one-half
the value of the property if only one spouse is
liable for the tax. Make payments in cash, or
by certified, cashier’s, or treasurer’s check. It
must be drawn on any bank or trust company
incorporated under the laws of the United
States, or of any state, or possession of the
United States. Payment can also be made by
United States postal, bank, express or telegraph money order. (If you pay by uncertified
personal check, issuance of the certificate
of discharge will be delayed until the bank
honors the check.)

4.

5.

If application is made under sections
6325(b)(2)(A) or 6325(b)(2)(B) and is for the
sale of a principal residence, the taxpayer may
be eligible for a relocation expense allowance
based on an inability to pay, and subject to
limitations. This allowance will be taken from
sale proceeds and will not reduce the tax
liability. To apply for the allowance, complete
and submit Form 12451, Request for Relocation Expense Allowance, with the application for
discharge.
If application is made under provisions of
section 6325(b)(2)(A), or 6325(b)(2)(B) because a mortgage foreclosure is contemplated,
there will be a determination of the amount required for discharge or a determination that the
Federal tax lien interest in the property is
valueless.

Within 30 days from the date of the application, the
applicant will receive a written conditional commitment for a certificate of discharge. When the
foreclosure proceeding has been concluded, a
certificate of discharge will be issued in accordance
with the terms of the commitment letter. Also, see
Publication 487, How to Prepare Application
Requesting the United States to Release Its Right to
Redeem Property Secured by a Federal Tax Lien.
6.

If application is made under the provisions of
section 6325(b)(3), the Technical Services
Group Manager has the authority to approve an
escrow agent selected by the applicant. Any
reasonable expenses incurred in connection
with sale of the property, the holding of the
fund, or the distribution of the fund shall be
paid by the applicant or from the proceeds of
the sale before satisfaction of any claims or
liens. Submit a copy of the proposed escrow
agreement as part of the application.

7.

A certificate of discharge under section
6325(b)(4) will be issued when an amount
equal to the United States interest in the
property is received. In the case of former
entireties property, the Service’s interest will be
one-half the value of the property. Payment of
the interest of the United States in the property
may be made in the form of cash, other certified funds, or the posting of a bond acceptable
to the Secretary.

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8.

Provide the name, address and telephone
number of your attorney or representative as
well as the closing attorney or Settlement
Company.

9.

If your application is denied, you have appeal
rights, Form 9423, Collection Appeal Request
and Publication 1660, Collection Appeal
Rights, will be issued, along with an explanation of why your application was denied.