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According to the IRS, at least $1 trillion in taxes goes unpaid every year. When you owe the IRS, they can demand payment, garnish your wages, and seize your assets. But before doing any of that, the agency will put a tax lien on your property.
In a nutshell, a tax lien gives the government a claim against your property—all of it. A tax lien even applies to property you acquire after the lien takes effect. If you’ve found yourself in this situation, it’s normal to feel outmatched by the IRS, but it’s also important to know your rights.
To request a lien discharge, you can submit IRS Form 14135 ((Application for Certificate of Discharge of Property From Federal Tax Lien). This is a request to discharge or remove a specific property from your federal tax lien.
Keep reading to learn more about what this important form can help you with and how to fill it out below.
You can apply for a lien discharge on specific property using Form 14135. This form requests the IRS to remove the lien from the property you list. You can request a tax lien discharge by filling out the form, submitting it to the IRS, and waiting for their response.
While a tax lien is inconvenient, the good news is that it won’t be levied against you without your prior knowledge. Before the IRS enacts a lien, they will first send you a tax bill, inform you of your rights, and ask you for payment.
They’ll only move on to initiating a lien if you flat-out refuse to pay your bill or neglect to contact them. If you find yourself in this situation, don’t stress just yet.
You can find Form 14135 digitally online directly from the IRS website. This form is the IRS’s official application for a certificate of release federal tax lien. You’ll want to look for this form specifically if you want to discharge property from the lien. If you’re hoping to remove the tax lien completely, you’ll want to focus instead on filling out Form 12277.
For Form 14135, you’ll need the following information:
Once you’ve collected all the necessary information, you’ll want to print off a copy of the form or complete it digitally. Below, we’ll go over how to fill out the form step-by-step.
In the first section of this form, you’ll want to enter all your personal information if you’re the person seeking a discharge. Enter your name, address, and the last four digits of your social security number. You’ll also submit your telephone number and your employer identification number (EIN) if it’s relevant. If you’re filling out the form for someone else, then be sure to put their information in section one.
Section two requests information about the applicant. If you are the taxpayer applying for the discharge, simply check the box to the right of “applicant information”. If you are not the taxpayer, then you’ll want to submit your personal details here.
In section three, you’ll need to enter the property owner’s name and their relationship to you. Section four only needs to be completed if you have an attorney or representative handling your tax situation for you.
Section five only needs to be completed if your discharge request is part of an escrow agreement with the IRS. In section six, you’ll put in the proposed sale amount of the asset you’re requesting the discharge for and the expected proceeds the IRS would receive if the property gets sold. In section seven, you’ll want to check the box describing why you’re requesting the discharge.
In section eight, you’ll want to describe the property in more detail, including providing the address and type of property. Next, in section nine, you’ll want to check the appropriate box about whether you’ve attached the required appraisal.
In Section 10, you’ll want to either check the attached box if you attached a copy of the federal tax lien or you can list out the number(s) of the liens. Sections 11, 12, and 13 are similar. You’ll either check the “attached” box if you’ve included copies of your sales contract, title report, and proposed closing statement. Check off the appropriate boxes in sections 14 and 15.
The section 16 waiver will only apply if you’re the property owner but you’re not liable for the tax debt or you’re applying under 6325(b)(2)(A). Finally, sign and date the 14135 form. Once everything is complete, you can send your official form off to the IRS.
A certificate of discharge removes the United States legal claim from the property that’s named in the certificate. If you successfully petition for the release of lien, then you will receive the certificate of discharge via the mail.
A few factors will impact when you get your official certificate, though. For one, it depends on when you divest your interest in the property. For another, the code under which your lien gets discharged will make a difference.
Here’s how the IRS code under which your certificate is granted will make a difference:
If the IRS denies your application, you will receive an explanation why.
If the IRS denies your request for a lien discharge, you have the right to appeal. First, ask to speak to a manager. If they won’t override the original denial, then, file Form 9423 (Collection Appeal Request). You must file this form within two days of the meeting with the manager.
When filling out the form, note that you’re appealing a federal tax lien. Then, write out why you requested the discharge and explain why the IRS should discharge the lien.
If you miss this short appeals window, you may be able to appeal through a Collection Due Process hearing. The IRS will notify you if you have this right, or you can talk with a tax attorney.
With a lien discharge, the federal government’s claim against a specific property is removed. In contrast, lien subordination does not actually remove the federal government’s claim to the property. Instead, subordination gives other creditors the right to claim the property (or proceeds from the sales of the property) before the IRS does. This means that other creditors will get paid before the IRS, but it doesn’t remove the lien.
When a tax lien gets discharged, the government’s claim to a specific property is removed. This doesn’t mean, however, that the lien is entirely discharged. The lien could still be attached to other properties, or it could apply to future properties you obtain.
When you have a specific asset you need to protect or that you want to sell, applying for a discharge of the lien is in your best interest. Discharging the lien can be beneficial if the tax lien has started to impact your credit.
If you get hit with a tax lien, there’s a good chance that it will tie up all of your assets initially. This could include essential things like your family home or vehicle. If you own a business, all rights to your business property and accounts receivable could also be attached to the lien. It could even apply to properties you buy later, too.
When you need a specific property discharged, then filling out Form 14135 is your best course of action. However, there could be other alternative solutions to your tax problem, depending on your specific circumstances. Consider the following:
If you do not agree with the IRS’s decision to put a lien on your property, then you can appeal a tax lien. Appealing a tax lien will require that you attend a hearing (typically on the phone) and explain why the tax lien should not remain in place. Usually, you’ll want to come to the hearing with an alternative plan for managing your tax debt.
The best way to both avoid and fix a tax lien is to pay your tax debt in full. Regardless of how far you feel the situation has gone with the IRS, you can always pay the amount you owe to rectify the situation. The IRS will release your lien within 30 days after you pay your tax debt.
If you’re not sure how much you owe on your lien, then there are a few things you can do to find out. One way is to call the IRS’s lien department at 1-800-913-6050. Another option is to contact the IRS revenue officer assigned to your case. You could go to a Taxpayer Assistance Center for in-person help. Or, seek assistance from a qualified tax professional at The W Tax Group.
You still have other options if you want to get rid of your lien but can’t afford to pay off your debt in full. The IRS may remove the lien against you if you both can agree on a plan to pay off your tax debt. To reach an agreement, consider submitting a payment plan request with the IRS.
Typically, a payment plan agreement means you’ll agree to make monthly payments on your debt and the IRS will agree to stop its collection efforts. When conditions are in the best interests of both the taxpayer and the government, the IRS will remove the lien.
Remember, though, that if you fail to uphold your end of the payment plan agreement, the lien could get reinstated.
If you’re facing a pending federal tax lien or one has already been put into action against you, then you need to consider your next steps very carefully. You have several options when dealing with the lien, and you want to make sure you make the right choice.
To help you better navigate your complicated situation, it might make the most sense to seek professional guidance from a tax expert. Here at The W Tax Group, our tax professionals will listen to your tax problems and help you identify potential solutions. From there, we’ll help you decide how to handle your tax problems and move forward. Don’t wait—Contact us now to discuss your tax situation with one of our tax professionals.
