Form 14135 Step by Step: Applying for a Certificate of Discharge Without Delaying Your Closing

Form 14135, Application for Certificate of Discharge of Property from Federal Tax Lien, is short. Seventeen sections across three pages. Most of them take a minute.

That is the trap. People fill out the form in an afternoon, staple on whatever documents are handy, and mail it. Then they wait. Then Advisory calls asking for a real appraisal, or a payoff letter, or an explanation of the $18,000 line on the closing statement labeled "misc." The closing date passes.

The form is easy. The package is the work. Here is how to build it section by section, using the current form (Rev. 11-2024) and the instructions in Publication 783 (Rev. 12-2022).

Before you start

Get three things first:

• The lien documents. Pull every Notice of Federal Tax Lien recorded against you from the county official records. Note each serial number, which Publication 783 calls the System Lien Identification Number, printed near the top right of the notice.
• A payoff figure. Publication 783 lists 1-800-913-6050 for the amount needed to pay the liens in full, or you can ask your assigned revenue officer.
• Your transcripts. Account transcripts confirm which periods are behind each lien and whether any balance has been paid down.

With those in hand, you can decide whether you even need a discharge. If the sale will pay the liens in full, a payoff and a certificate of release may be simpler. If not, keep going.

Sections 1 through 5: who is involved

Section 1, Taxpayer information. The name exactly as it appears on the notice of lien, the address, and the identifying numbers. Publication 783 says to enter the last four digits of the Social Security number, or the full employer identification number, as shown on the lien.

Section 2, Applicant. Check the box if you are the taxpayer. If you are not, give your relationship to the taxpayer and attach a copy of the lien.

Section 3, Purchaser or new owner. Who is buying. This is where the IRS starts looking for related-party sales.

Section 4, Representative. If an attorney, title agent, or lender's representative will talk to the IRS, list them and attach Form 2848 or Form 8821. Publication 783 says you must provide one of those forms if the representative represents an interest other than the taxpayer.

Section 5, Lender or settlement company. Name and contact for the title or escrow company handling settlement. For a 6325(b)(3) escrow request, this is the escrow agent.

Section 6: the money

Two numbers: the proposed sale price, and the amount you expect the IRS to receive. If you expect nothing, as in a short sale, enter zero. This number has to match your closing statement. If it does not, expect a phone call.

Section 7: pick your subsection

This is the legal heart of the application. You check one box:

• 6325(b)(1) if your remaining property is worth at least double the liability plus senior liens. See the double-value guide.
• 6325(b)(2)(A) if the IRS will receive the value of its interest in this property.
• 6325(b)(2)(B) if the IRS interest has no value because senior liens exceed the value.
• 6325(b)(3) if the proceeds will be held in escrow subject to the IRS claims. See the escrow guide.
• 6325(b)(4) if you are a third-party owner, not the taxpayer, making a deposit or posting a bond.

Publication 783 says that if the IRS disagrees with your selection after review, it will explain its decision. Choose the box that fits the facts, not the one you hope for.

Section 8: the property

Describe the property ("three-bedroom single-family rental") and give the street address. For real estate, attach a legible copy of the deed showing the legal description. For a 6325(b)(1) request, attach deeds for the property that will remain subject to the lien too.

Section 9: appraisal and valuations

This is where most applications stall. Form 14135 requires a professional appraisal completed by a disinterested third party, plus one additional valuation: the county valuation, an informal valuation by a disinterested third party, the proposed price for an auction sale, or another source.

Publication 783 describes the appraisal the IRS typically expects: neighborhood analysis, site description, improvements, cost approach, comparable sales, a market value definition, certification, interior and exterior photos, a comparable sales map, a floor sketch, a flood map, and the appraiser's qualifications. A broker price opinion is not that. An online estimate is not that.

In coastal Southwest Florida, the flood map and condition notes matter. If the price reflects storm damage or deferred maintenance, the appraisal should say so plainly.

Sections 10 through 13: the deal documents

Section 10, Copy of the lien. Required if the applicant and taxpayer differ. Otherwise list the serial numbers.

Section 11, Sales contract. Attach the signed purchase agreement. If there is none, describe how and when the taxpayer will be divested of the property.

Section 12, Title report. Attach a current title report or list every encumbrance senior to the federal tax lien with holder, type, date, original amount, rate, current balance, and any family relationship. Family relationship matters because insider liens get scrutiny.

Section 13, Proposed closing statement. Attach it or itemize every cost, commission, and expense of the sale. Advisory reads this line by line. Every item should be a normal cost of selling real estate.

Sections 14 through 17: the rest

Section 14, Additional information. Pending litigation, a divorce decree that splits the property, a probate order, repair estimates, or a letter explaining an unusual feature of the deal. Use it. Explaining a problem up front is faster than explaining it after a denial.

Section 15, Escrow agreement. Only for 6325(b)(3) requests. The agreement must specify the account type, depositary, conditions for payment, escrow cost, parties, and signatures including the Advisory Group Manager.

Section 16, Waiver. Only for a property owner who is not the taxpayer and applies under 6325(b)(2). Waiving gives up the deposit treatment of 6325(b)(4) and the court remedy under IRC 7426(a)(4). Declining the waiver converts the application to a 6325(b)(4) request.

Section 17, Declaration. Signed under penalties of perjury. Read what you are signing.

Mailing and timing

Publication 783 directs the package to IRS Advisory Consolidated Receipts at 7940 Kentucky Drive, Stop 2850F, Florence, KY 41042, with a phone line of 859-594-6090 for questions, and points to Publication 4235 for Collection Advisory group contacts. Confirm the current address before mailing.

Submit at least 45 days before the date you need the certificate. Publication 783 is explicit about that window. Do not send payment with the application. For 6325(b)(2)(A) and 6325(b)(3), the Advisory Group Manager tells you the amount and when to pay. Acceptable payment types listed in Publication 783 include cash, certified, cashier's, or treasurer's checks, and money orders. A personal check delays the certificate until it clears.

A short checklist before it goes in the envelope

1. Does the Section 6 figure match the closing statement?
2. Is the appraisal from someone with no stake in the deal, with photos and comparables?
3. Does every senior lien on the title report have a current payoff letter?
4. Is every closing cost a normal cost of sale?
5. If the buyer is related to you, did you explain the price in Section 14?
6. Is Form 2848 or 8821 attached for each representative?
7. Is the closing date at least 45 days out?

For the bigger picture of how the closing works once the commitment letter arrives, read the guide to selling a home with a federal tax lien. If the property is a short sale, add the short sale guide to your reading.

Three pages of form. A stack of proof behind it. Send the stack.