Section 8 for either application form asks for a description of your property, which could be either real estate or personal property such as art work, a boat, a plane, or your business receivables. Don’t forget to provide the property address.
Now time for another tip ….
If the property is real estate, check the “attached” box and include a legible copy of the deed.
For Section 9 of form 14135, when you are selling property, the IRS requires a professional appraisal, which is generally part of the closing package and a second type of value estimate.
Form 14134 Section 9 does not call for a professional appraisal for your refinance or loan. Check the box for the type of value estimate you are including.
Sections 10 through 14 are a checklist of the attachments which you must include with either the discharge or subordination application form.
Section 10 asks for copies of the federal tax liens attached to the property. You can either provide us copies of the Notices of Federal Tax Lien and mark the “attached” box or write down the lien number and check the “no” box.
The information in Section 11 will vary depending on the type of transaction.
When you are selling property and using form 14135, you need to provide a copy of your sales contract. If you don’t have a copy of your sales contract, explain how the property ownership will transfer and to whom.
When your property is collateral for a loan and you are using Form 14134, you need to send the IRS a copy of your loan agreement. If you don’t have a loan agreement, tell us how your new loan will benefit the IRS.
Sections 12 and 13 are the same for either form 14135 or form 14134.
In Section 12, the IRS requires a copy of the current title report. If you don’t have a title report, check the “no” box and list all creditors with liens or claims against the property being sold or used as collateral.
In Section 13, the IRS needs a copy of your proposed closing statement, to determine how the money will be distributed. Typically the statement is on a HUD-1 form.
Here’s a new tip:
If you are providing additional documents that are important to your situation, you would check the box in Section 14 and include the documents with your application form. Here are a few common examples.
If this is a short sale, attach your short sale documents. Or, if you want the IRS to consider allowing relocation expenses, attach form 12451.
These next two sections only pertain to Discharge Form 14135:
If your property will be sold in an escrow sale, with creditors paid from the escrow, the IRS needs your draft escrow agreement with your form 14135. Be sure to check the “attached” box in Section 15.
Once we receive your draft agreement, we will work with you on finalizing the agreement.
Section 16 of form 14135 is if you bought property with a lien attached where you are not the taxpayer and you checked 6325(b)(2)(A) or (B) as your basis for discharge in section 7.
Check the Waive box in this section. Please read Publication 783, Section 7 for further explanation.
The final section on both forms is the Declaration. Here is where you must sign and date your application under penalties of perjury.
At this point, your form should be complete. Attach all your supporting paperwork and send your application package to one of the IRS Advisory Offices.
Here’s a Quick tip:
The correct mailing address of the IRS Advisory Office will be found in publication 4235. It will be the one for the state that the Notice of Federal Tax Lien was filed in.
Once the correct Advisory Office receives your application, it will be reviewed first come, first served. An employee of the IRS Advisory group will contact you if they have a question, or your application is incomplete.
The IRS Advisory approves or denies your request based on your application and comparison with federal and state property rules.
If the IRS approves your application, they will send you your discharge or subordination certificate, based on what box you checked, or best applies to you in Section 7.
Advisory may send you a commitment letter if there are conditions which must be met in order to grant your request. Your certificate is not issued until the conditions of the commitment are fulfilled.
See Frequently Asked Question 4 in either Publication 783 or Publication 784 for the full details on when you can expect to receive your certificate.
If, however, the IRS denies your request, or you disagree with the IRS valuation in a commitment letter, you can request an appeal through the Advisory office using Form 9423, Collection Appeal Request.
Publication 1660, Collection Appeal Rights, explains your appeal rights.
We know that having a notice of federal tax lien on your property raises many complex financial issues. Our in-depth coverage of subordination and discharge application forms was designed to give you the knowledge needed to be able to navigate successfully through the application process. Be sure to check the IRS publications or talk to the IRS Advisory Group or your tax advisor for more details. Thank you.