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

Section 6325(b)(4) – A discharge may be issued to

The Technical Services Group Manager has the

third parties if a deposit is made or an acceptable

authority to issue a certificate of discharge of a lien

bond is furnished in an amount equal to the value of

that is filed on any part of a taxpayer’s property

the government’s interest in the property. In the

subject to the lien. The following sections and

case of former entireties property, a deposit of one-

provisions of the Internal Revenue Code apply:

half the value of the property or a bond equal to

Section 6325(b)(1) – A specific property may be

one-half of the value of the property will be deter-

discharged; if the taxpayer’s property remaining

mined to be the government’s interest. An owner of

subject to the lien has a Fair Market Value (FMV)

property (other than the taxpayer) who makes a

which is double the sum of: a) the amount of the

deposit or furnishes a bond and obtains a discharge

liability secured by such liens, and b) all other liens

under section 6325(b)(4) has, under section

which have priority over the federal tax lien(s).

7426(a)(4), 120 days after the discharge to file an

(FMV=(a+b)x2)

action in federal district court challenging the

Service’s determination of the government’s lien

Section 6325(b)(2)(A) – If there is paid in partial

interest.

satisfaction of the liability secured by the lien an

amount determined to be not less than the value

This is the exclusive remedy available to the

of the interest of the United States in the property

third party for the return of the deposit or

to be discharged. In the case of entireties property

accepted bond or a portion thereof. An admin-

sold, if only one spouse is liable for the tax, the

istrative request for refund and a refund suit in

United State’s must generally be paid one-half of

district court is not available. See section

the proceeds in partial satisfaction of the liability

7426(a)(4).

secured by the tax lien.

No payment is required for the issuance of a

NOTE: Because making an application and deposit

certificate under section 6325(b)(1) or

(or providing a bond) under section 6325(b)(4)

6325(b)(2)(B) of the Internal Revenue Code.

provides a judicial remedy not available for an

Payment is required for certificates issued

application and payment made under section

under section 6325(b)(2)(A). Do not send the

6325(b)(2), owners (other than the taxpayer)

payment with your application. The Technical

wishing to apply for a certificate of discharge under

Services Group Manager will notify you after

this provision must waive, in writing, their rights to

determining the amount due.

make a deposit allowed under Section 6325(b)(4)

and to file suit for return of the deposit or accepted

The Technical Services Group Manager will

bond allowed under section 7426(a)(4). Unless the

have your application investigated to determine

waiver has been provided in writing, the Service will

whether to issue the certificate and will let you

treat an application made by an owner of the

know the outcome.

property (other than the taxpayer) as an application

A certificate of discharge under section

made under section 6325(b)(4), with all funds

6325(b)(2)(A) will be issued upon receipt of the

treated as a deposit.

amount determined to be the interest of the

Other than the judicial review available under the

United States in the subject property under the

deposit/bond procedures under sections 6325(b)(4)

Federal tax lien. In the case of entireties prop-

and 7426(a)(4), there is no remedy available to the

erty sold by the taxpayer or taxpayer spouse,

third party for the return of payment (or portion

the Service’s interest will generally be one-half

thereof). An administrative request for refund and a

the value of the property if only one spouse is

refund suit in district court is not available.

liable for the tax. Make payments in cash, or

by certified, cashier’s, or treasurer’s check. It

Section 6325(b)(2)(B) – It is determined that the

must be drawn on any bank or trust company

interest of the United States in the property to be

incorporated under the laws of the United

discharged has no value.

States, or of any state, or possession of the

Section 6325(b)(3) – If the property subject to the

United States. Payment can also be made by

lien is sold, and, under an agreement with the

United States postal, bank, express or tele-

Internal Revenue Service, the proceeds from the

graph money order. (If you pay by uncertified

sale are to be held as a fund subject to the liens and

personal check, issuance of the certificate

claims of the United States in the same manner and

of discharge will be delayed until the bank

with the same priority as the liens and claims on the

honors the check.)

discharged property.

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

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