1. What Must Change before Your Sale or Loan Can Proceed?
A closing may require removal of the lien from one asset or a change in creditor priority. The lender’s requirements and proposed distribution of proceeds help identify the appropriate IRS request.
Confirm Ownership and Available Equity
A federal tax lien generally arises after assessment, demand for payment, and failure to pay. The Notice of Federal Tax Lien, or NFTL, publicly records the IRS’s claim; it does not create the underlying lien.
The review starts with the assessed taxpayer, affected tax periods, and ownership records. A corporation’s assessment does not automatically attach to an owner’s separate property.
For real estate transactions, an attorney compares the sale price, mortgage balances, competing claims, and proposed costs. These figures help establish the IRS’s interest and the proceeds available at closing.
2. Choose the Tax Lien Remedy That Fits the Deal
Ending a lien, clearing one asset, and changing priority require different requests. A payment arrangement alone may leave the transaction obstacle unresolved.
Compare the Legal Effects
| Remedy | What Changes | Typical Purpose |
|---|---|---|
| Release | Ends the lien covered by the certificate | Addresses satisfied or legally unenforceable liability |
| Discharge | Removes specified property from the lien | Allows an eligible sale or transfer |
| Subordination | Gives a specified creditor priority | Supports qualifying financing |
| Withdrawal | Withdraws the public NFTL | Addresses a qualifying filing without necessarily ending the debt |
Check Eligibility before Applying
Under IRC §6325(a), the IRS must issue a release certificate within 30 days after determining that the liability is fully satisfied or legally unenforceable. Acceptance of a qualifying bond also triggers release. Withdrawal under IRC §6323(j) has separate grounds, including an improper or premature filing and certain installment arrangements.
A discharge under §6325(b) may permit a sale without paying the entire tax debt. Subordination under §6325(d) requires a statutory basis, such as qualifying payment or an expected increase in collection. The lender’s demand for first priority is not enough.
3. Support the Request with Value and Priority Evidence
The application must explain the proposed transaction and support the requested treatment of the IRS’s interest. A submitted request does not authorize closing on those terms.
Review Competing Interests
IRC §6323 governs priority against certain protected interests and includes exceptions. State law helps identify property rights; federal law determines the lien’s consequences.
For asset-based lending, security documents and filing dates matter alongside the collateral value.
Prepare the Application and Closing Conditions
Discharge applications generally use Form 14135; subordination applications generally use Form 14134. Supporting records may include:
Ownership documents and property descriptions.
Valuations and competing lien balances.
Sale contracts or financing terms.
A closing statement showing proposed payments and costs.
An attorney can prepare the request and coordinate conditions with the lender or closing agent. Changes to price, financing, or proceeds may require further IRS review.
4. Keep Hearing Deadlines Separate from Transaction Requests
A certificate application does not extend a Collection Due Process hearing deadline. Transaction work and an administrative challenge may need to proceed together.
Review Letter 3172
Under IRC §6320, the IRS generally must notify the taxpayer within five business days after NFTL filing. The 30-day CDP request period begins the day after that period ends. Letter 3172 ordinarily states the deadline.
Form 12153 requests an IRS Appeals hearing. Preserve the notice, envelope, and submission evidence. A late request may qualify for an equivalent hearing, generally without the same Tax Court review rights.
Identify What Appeals Can Consider
Appeals can review procedural compliance, objections to the filing, and collection alternatives. A taxpayer generally may dispute the underlying liability only if they did not receive a statutory notice of deficiency or otherwise have a prior opportunity to dispute it.
Tax controversy and litigation review should distinguish collection objections from assessment disputes.
Avoid Assuming the Lien Has Expired
An installment agreement generally does not release an existing lien. Tax debt resolution may require a separate lien request.
The collection period generally runs ten years from assessment, subject to statutory suspensions or extensions. Interest and applicable penalties may continue accruing, but accrual alone does not extend that period.
5. Frequently Asked Questions
Approval and recording are separate steps.
Can an Attorney Guarantee Approval before Closing?
No. The IRS decides whether the request qualifies. An attorney can prepare submissions and address agency questions, but cannot guarantee approval or processing time.
Is a Payment Receipt Enough to Clear Title?
Not necessarily. A receipt supports payment, but the release certificate and recording records should match the liens identified in the title review.
6. Review the Lien before Finalizing the Deal
Bring the NFTL, IRS notices, account transcripts, ownership records, creditor balances, and proposed transaction documents to a tax lien consultation. Include the lender’s written requirements and closing date. An attorney can assess the remedy, hearing deadlines, and necessary submissions before the parties finalize proceeds instructions.
08 Oct, 2026
