When the IRS files a Notice of Federal Tax Lien (NFTL) against you for unpaid taxes, it attaches to virtually all your property—including your home, car, business assets, and even future property you acquire. If you need to sell or transfer that property while the lien is still active, Form 14135 is your gateway to freedom. This application requests a Certificate of Discharge, which removes specific property from the lien's grip so you can complete your transaction.

What Form 14135 Is For

Form 14135, officially titled "Application for Certificate of Discharge of Property from Federal Tax Lien," is the IRS document you use to request the removal of specific property from a federal tax lien. Think of it as asking the government to release its claim on a particular asset—like your house or vehicle—while the overall tax debt may still exist.

A federal tax lien automatically arises when you owe the IRS and don't pay after they demand payment. This lien becomes a legal claim against all your property. When the IRS files a Notice of Federal Tax Lien publicly, it alerts creditors, banks, and potential buyers that the government has a claim to your assets. This makes selling, refinancing, or transferring property nearly impossible without addressing the lien.

Form 14135 doesn't eliminate your tax debt or remove the lien entirely—it simply releases one specific piece of property from the lien so you can proceed with a sale, transfer ownership, or refinance. The lien continues to attach to your other property and rights to property.

When You'd Use Form 14135 (Including Late or Amended Situations)

You'll need Form 14135 when you want to sell or transfer property that's encumbered by a federal tax lien. Common scenarios include:

• Selling your home or real estate when a Notice of Federal Tax Lien has been filed
• Selling a vehicle, equipment, or other personal property that's subject to the lien
• Transferring property ownership as part of an estate settlement after someone's death
• Completing a foreclosure or short sale where the bank needs clear title
• Refinancing property (though Form 14134 for subordination is typically used in refinancing situations)

Timing is critical: The IRS strongly recommends submitting Form 14135 at least 45 days before your anticipated transaction date (such as a closing). This allows sufficient time for the IRS Advisory office to review your application, request additional information, make their determination, and issue the necessary documents.

You should file Form 14135 before completing any sale or transfer—not after. If you've already sold property without addressing the lien, the situation becomes significantly more complicated. The discharge must generally be approved before the transaction closes.

There's no "late" or "amended" version of Form 14135 in the traditional sense. If your circumstances change after you submit the form—for example, the sale price changes or the closing date shifts—you should immediately contact the IRS Advisory office handling your application to provide updated information. If your application is denied and circumstances change, you can submit a new application with corrected information.

Key Rules You Need to Know

Form 14135 operates under strict legal provisions found in Internal Revenue Code Section 6325(b). The IRS can only approve your discharge request if it meets one of five specific conditions:

IRC 6325(b)(1) – Double Value Remaining

Your remaining property (after the discharge) must have a fair market value of at least twice the sum of your federal tax debt plus any debts senior to the IRS lien. For example, if you owe the IRS $20,000 and have $30,000 in senior mortgages ($50,000 total), you'd need $100,000 worth of other property remaining after discharge.

IRC 6325(b)(2)(A) – Part Payment

You pay the IRS an amount equal to the government's interest in the property being discharged. This is the most common scenario for home sales. The IRS calculates its interest by taking the sale price, subtracting senior encumbrances (like mortgages) and reasonable closing costs, and determining what equity remains for the government.

IRC 6325(b)(2)(B) – No Value/No Equity

The IRS determines that the government's interest in the property has no value. This typically occurs when senior liens (mortgages, property taxes) exceed the property's sale value—common in short sales or foreclosures.

IRC 6325(b)(3) – Escrow Substitution

The proceeds from the property sale are held in escrow, subject to the government's lien in the same priority as before. This preserves the IRS's claim while allowing the property to be sold.

IRC 6325(b)(4) – Third-Party Deposit or Bond

A third-party property owner (not the taxpayer) deposits cash or provides a bond equal to the government's interest in the property. This provision includes special rights allowing the third party to challenge the IRS's valuation in court.

Important Limitations

• For IRC 6325(b)(1) applications, you must be in filing compliance, current with estimated tax or Federal Tax Deposit payments, and have addressed balance-due accounts.
• You generally must be divested of all interest in the property for provisions (b)(2)(A), (b)(2)(B), and (b)(3).
• Third-party owners applying under (b)(2)(A) must waive certain legal rights or their application will automatically be treated under (b)(4).

Step-by-Step Process (High Level)

Step 1: Determine Which Discharge Provision Applies

Review the five discharge scenarios described in Section 7 of Form 14135 and Publication 783. Identify which provision best fits your situation. If you're selling your home with some equity, you're likely using (b)(2)(A). If it's a short sale with no equity, (b)(2)(B) applies.

Step 2: Gather Required Documentation

You'll need substantial documentation, including:

• A professional appraisal from a disinterested third party
• Additional valuation (county assessment, informal valuation, or auction price)
• Title report showing all liens and encumbrances on the property
• Sales contract or purchase agreement
• Proposed closing statement (HUD-1 or similar)
• Copy of the Notice of Federal Tax Lien
• Legal descriptions, deeds, and property descriptions

Step 3: Complete Form 14135

Fill out all sections of the three-page form, including taxpayer information, applicant information (if different from taxpayer), purchaser/transferee details, representative information (if applicable), lender/finance company details, monetary information, basis for discharge, property description, and supporting documentation checkboxes. Sign under penalty of perjury.

Step 4: Submit Your Application

Mail the completed Form 14135 with all attachments to:
IRS Advisory Consolidated Receipts
7940 Kentucky Drive, Stop 2850F
Florence, KY 41042

Submit at least 45 days before your transaction date. For questions, call 859-594-6090.

Step 5: Wait for IRS Review

Advisory staff will review your application, verify information, and may contact you or third parties for additional details. The Advisory Group Manager must approve the determination.

Step 6: Receive Conditional Commitment Letter

If approved, you'll receive a conditional commitment letter explaining what's needed before the certificate is issued (typically payment and proof of transfer).

Step 7: Complete Your Transaction and Provide Final Documentation

Close on your sale or transfer. Provide the IRS with proof of transfer (deed showing you're divested of title) and the final settlement statement.

Step 8: Receive Your Certificate of Discharge

Once the IRS receives payment (if required) and proof of transfer, they'll issue the appropriate Form 669 series certificate (669-A, 669-B, 669-C, 669-G, or 669-H depending on which provision applies).

Common Mistakes and How to Avoid Them

Mistake #1: Waiting Until the Last Minute

Many applicants submit Form 14135 days before closing, causing delays or missed closings.
Solution: Submit at least 45 days before your transaction date. Start the process as soon as you have a buyer or contract.

Mistake #2: Incomplete or Missing Documentation

Applications missing required appraisals, title reports, or closing statements get delayed or returned.
Solution: Carefully review the checklist in Section 9-13 of Form 14135. Include every required document and check the "Attached" boxes.

Mistake #3: Using the Wrong Discharge Provision

Applicants sometimes select the wrong IRC section in Section 7, leading to confusion or denial.
Solution: Read Publication 783 thoroughly or consult with a tax professional to determine which provision applies to your specific situation.

Mistake #4: Failing to Provide Secondary Valuation

The IRS requires a professional appraisal plus one additional valuation method (county assessment, informal valuation, or auction price).
Solution: Don't just provide the appraisal—include a second valuation document.

Mistake #5: Not Addressing Filing Compliance for (b)(1) Applications

If you're applying under IRC 6325(b)(1), you must be current with tax filings and payments.
Solution: File all required returns and make current estimated tax or deposit payments before submitting.

Mistake #6: Third Parties Not Providing Required Waiver

Third-party property owners applying under (b)(2)(A) must waive their (b)(4) rights in Section 16. Missing this converts their application to (b)(4).
Solution: If you're a property owner but not the taxpayer, carefully complete Section 16.

Mistake #7: Sending Payment With Application

The instructions specifically state "do not send payment with the application."
Solution: Wait for the Advisory Group Manager to notify you of the amount due and when to send payment.

What Happens After You File

Initial Review (1–4 weeks)

Advisory staff receive your application and begin reviewing it for completeness. If information is missing or unclear, they'll contact you, your representative, or third parties for clarification. Respond promptly to any requests for additional information to avoid delays.

Investigation and Determination (2–6 weeks)

The Advisory staff investigate your application, verify property values, confirm lien priorities, calculate the government's interest, and determine whether your application meets the legal requirements for discharge. They may research comparable sales, review title information, or contact lenders.

Manager Approval

The Advisory Group Manager reviews the staff's recommendation and makes the final decision to approve or deny the discharge request.

Conditional Commitment Letter (if approved)

If approved, you receive Letter 402 (for no-value discharges) or Letter 403 (for part-payment discharges) explaining the conditions you must meet before receiving the certificate. For part-payment discharges, this letter specifies the exact amount the IRS must receive.

Payment and Closing

You proceed with your closing. If payment is required under (b)(2)(A), the IRS receives its payment from the closing proceeds. You provide the IRS with proof that you've been divested of title (copy of recorded deed) and a copy of the final settlement statement.

Certificate Issuance

Once all conditions are met—payment received, proof of transfer provided—the IRS issues the appropriate Certificate of Discharge (Form 669 series). This document officially removes the specific property from the federal tax lien.

If Denied

If your application is denied, you'll receive Form 9423 (Collection Appeal Request) and Publication 1660 (Collection Appeal Rights) with an explanation. You have appeal rights and can submit a new application if circumstances change.

Timeline

The entire process typically takes 4–8 weeks from submission to certificate issuance, which is why the 45-day advance submission is crucial. Complicated cases or incomplete applications take longer.

FAQs

Q1: Does Form 14135 eliminate my tax debt?

No. Form 14135 only removes specific property from the lien. Your tax debt remains, and the lien continues to attach to your other property and rights to property. You still owe the IRS and must address the underlying tax liability through payment arrangements, offers in compromise, or other collection alternatives.

Q2: Can I file Form 14135 if I haven't received a Notice of Federal Tax Lien?

No. Form 14135 is specifically for discharging property from a filed federal tax lien. If no NFTL has been filed, the lien still exists (it arises automatically when taxes are assessed and not paid), but the discharge process doesn't apply. You may be able to sell your property and use proceeds to satisfy the tax debt through normal collection channels.

Q3: How much will I have to pay the IRS to discharge my property?

It depends on which discharge provision applies. Under (b)(1) and (b)(2)(B), no payment is required. Under (b)(2)(A), you pay an amount equal to the government's interest in the property—essentially the equity remaining after subtracting senior liens and reasonable expenses from the sale price. The IRS will calculate this amount and notify you in the conditional commitment letter.

Q4: What happens if my home is worth less than my mortgage (short sale)?

This is a common (b)(2)(B) situation. If senior liens exceed the property value, the government's interest has no value, and you typically don't have to pay the IRS anything to get the discharge. You'll still need to complete Form 14135, provide all documentation, and prove the property has no equity after senior encumbrances are paid.

Q5: Can I get help with relocation expenses if I'm selling my home?

Possibly. If you're discharging your principal residence under (b)(2)(A) or (b)(2)(B) and you can demonstrate an inability to pay, you may qualify for a relocation expense allowance. You must submit Form 12451 (Request for Relocation Expense Allowance) with your discharge application. Note: If you receive relocation payments through the Home Affordable Foreclosure Alternatives Program (HAFA), you're not eligible for this allowance.

Q6: What's the difference between discharge (Form 14135) and subordination (Form 14134)?

Discharge removes property from the lien entirely, typically used when selling or transferring ownership. Subordination elevates another creditor's lien above the IRS lien in priority, typically used when refinancing property you're keeping. Choose discharge if you're selling; choose subordination if you're refinancing and retaining ownership.

Q7: Will the discharge appear on my credit report?

The discharge itself doesn't appear on your credit report, but the original Notice of Federal Tax Lien does (and damages your credit significantly). Discharging specific property doesn't remove the NFTL from public record—only paying the debt in full, waiting for the collection statute to expire, or obtaining a lien withdrawal will accomplish that. See Form 12277 for lien withdrawal after the debt is resolved.

For More Information:

• Form 14135: IRS.gov/pub/irs-pdf/f14135.pdf
• Publication 783 (Instructions): IRS.gov/pub/irs-pdf/p783.pdf
• IRS Advisory Contact: 859-594-6090
• General Lien Information: IRS.gov - Understanding a Federal Tax Lien

This summary is for informational purposes only and should not be considered legal or tax advice. For complex situations, consult with a tax professional, enrolled agent, or tax attorney who can review your specific circumstances.