Instructions On How To Apply For Certificate Of Discharge From Federal Tax Lien (Page 3 of 4) in pdf

Section 10 - Federal Tax Liens

Section 16 - Waiver

This section is important when the applicant and the taxpayer

This section applies only if you are:

are different. If the applicant and the taxpayer are the same,

• The property owner, but

this section may be skipped.

• Not liable for the tax debt (i.e. not named on the lien), and

Check the “attached” box if you have attached copies of the

• Applying under 6325(b)(2)(A).

liens with your application.

By checking the “Waive” box you are waiving the option to have

the payment treated as a deposit under section 6325(b)(4)

If you checked the “no” box list the System Lien Identifica-

which has the accompanying right to request a return of funds

tion Number (SLID) found in the top right hand box of the

and to bring an action under section 7426(a)(4).

lien document, if available. If you do not have the number(s)

If you check the “no” box, your application will automatically be

enter “unknown” in the first box.

considered under 6325(b)(4) which provides for return of depos-

ited funds and a court challenge under 7426(b)(4).

Section 11 - Sales Contract/Purchase Agreement

Check the box indicating whether the proposed sales con-

Section 17 - Declaration

tract or purchase agreement is attached.

The applicant or their authorized Power of Attorney signs the

If you checked the “no” box, describe how the taxpayer

application form. You must sign your application under penalties

named on the lien will be divested of their interest in the

of perjury attesting to having examined the application, accom-

property or why they have no interest in the property.

panying schedules or documents, exhibits, affidavits, and state-

ments and declaring to the best of your knowledge and belief

Section 12 - Title Report

that it is true, correct and complete.

Check the box indicating whether the title report is attached.

Frequently Asked Questions

If you checked the “no” box, use the space provided to list

any encumbrances (liens or claims) against the property

Q1: When do I make a payment?

that came into existence before the United States’ lien inter-

The Internal Revenue Code section under which the certificate

est or which have priority over the lien. Include name and

of discharge will be issued or granted determines the details

address of holder; description of encumbrance, e.g., mort-

regarding making a payment.

gage, state lien, etc.; date of agreement; original amount

• Discharge under 6325(b)(1) or 6325(b)(2)(B) does not

and interest rate; amount due at time of application; and

require a payment.

family relationship of the holder, if applicable.

• Discharge under 6325(b)(2)(A) requires a payment, but do

Attach a separate sheet with the information in item # 2

not send a payment with the application. The Advisory Group

above if there is not enough space provided on the form.

Manager will notify you, after determining the amount due,

when to send payment.

Section 13 - Closing Statement

NOTE: If a mortgage foreclosure is anticipated, the applica-

Check the box indicating whether the proposed closing

tion is made under section 6325(b)(2)(A) or 6325(b)(2)(B). A

statement is attached. This statement is often referred to

determination will be made that either an amount is required for

as a HUD-1.

discharge or the United States’ interest is valueless.

If you checked the “no” box, use the space provided to

In the case of foreclosure you will receive, within 30 days of the

itemize all proposed costs, commissions, and expenses of

receipt of a complete and approved application, a conditional

any transfer or sale associated with property.

commitment letter for a certificate of discharge.

Attach a separate sheet with the information in item # 2

NOTE: Relocation Expenses - If a discharge under 6325(b)(2)

above if there is not enough space provided on the form.

(A) or 6325(b)(2)(B) is issued and if the sale is of the principal

residence, the taxpayer may be eligible for a relocation expense

Section 14 - Additional Information

allowance because of an inability to pay. The relocation ex-

Check the box indicating whether you are attaching other

pense allowance is subject to limitations. To apply for the allow-

documents relevant to the discharge application. This

ance complete and submit

Form

12451, “Request for Relocation

could include affidavits or court documents.

Expense Allowance” with the application for discharge.

Check the “no” box if you do not have any additional docu-

• Discharge under 6325(b)(3) requires a payment, but do not

mentation.

send a payment with the application. First, the draft escrow

agreement must be submitted.

Section 15 - Escrow Agreement

Second, the Advisory Group Manager approves the escrow

Check the box indicating whether you are attaching a draft

agent selected by the applicant; any reasonable expenses

submitted as incurred in connection with the sale of the prop-

escrow agreement. This is only applicable if you are apply-

erty; the claim amounts and priorities, and the distribution

ing under 6325(b)(3).

timing of the fund.

An escrow agreement must specify type of account,

name and depositary for account, conditions under which

Third, the agreement is finalized and contains signatures of

payment will be made, cost of escrow, and the name

all parties involved including Advisory Group Manager prior to

and address of any party identified as part of the escrow

the discharge being issued.

agreement.

Publication 783 (Rev. 6-2010)

Catalog Number 46755I

Department of the Treasury Internal Revenue Services

Instructions On How To Apply For Certificate Of Discharge From Federal Tax Lien Page 3

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