I. INTRODUCTION
The Internal Revenue Service (IRS) is authorized to file notices of federal tax liens at recording offices nationwide. The law requires the IRS to release fully paid and unenforceable liens. Compliance with this requirement has figured prominently in the Service’s transition to centralized lien filing. In 2005, the IRS consolidated multiple lien operations, on a state-by-state basis throughout the United States into a single centralized lien processing operation at the Cincinnati IRS Campus. The Cincinnati IRS Campus Centralized Lien Unit assists taxpayer representatives, lenders, and escrow and title companies requesting a balance due or a payoff statement for a Notice of Federal Tax Lien.
II. LIEN RELEASE PROCEDURE
The IRS has established standardized procedures to expedite requests for lien discharge, release and subordinations nationwide. If a taxpayer has paid the tax due, along with interest and penalties and has not received a copy of the Certificate of Release of Federal Tax Lien, the taxpayer or authorized representative may call the Centralized Lien Processing Unit at the toll-free number 1-800-913-6050.
Third parties must submit any request in writing using a properly completed Form 2848, power of attorney and declaration of representative or Form 8821, tax information authorization, signed by the taxpayer. In the absence of either a Form 2848 or Form 8821, the IRS cannot disclose taxpayer information to third parties.
When requesting a balance due for tax liabilities identified on a federal tax lien, please provide the following:
In responding, the IRS will mail two copies of all payoff letters, one of which must be returned with the payment to ensure proper application and timely release of the lien. Payoff computations may take up to 14 calendar days to process. Your successfully completed fax transmission or mailing certification, serves as your acknowledgment.
III. SELF-RELEASE OF LIENS
A federal tax lien usually releases automatically 10-years after the tax is assessed unless the statutory period for collection has been extended and the effect of the lien has been extended by re-filing. These liens are considered self-released and the IRS does not issue a release. When a lien is self-releasing, the Notice of Federal Tax Lien itself becomes the release document. Interested parties should check the column titled Last Day for Re-filing on the Notice of Federal Tax Lien to determine if the lien is self-released. The lien has been self-released if the date for re-filing has passed and the IRS has not filed another Notice of Federal Tax Lien.
IV. REQUESTING A BALANCE DUE FOR LIEN RELEASE
The assessed amount of the lien at the time of filing will remain a matter of public record until it is paid in full. However, at any time, the taxpayer or his or her representative may request an updated lien payoff or balance due amount to show the remaining balance due. An IRS employee can issue a letter to the taxpayer with the current amount that must be paid before the IRS releases the Notice of Federal Tax Lien.
Requests for such information may be mailed to: Internal Revenue Service, CCP-Lien Unit, PO Box 145595, Stop 8420G Team 206, Cincinnati, Ohio, 45250-5595. Fax requests may be sent to the number listed in Publication 1450 (Fax # - 859-669-5152), instructions on how to request a Certificate of Release of Federal Tax Lien.
V. APPLYING FOR A DISCHARGE OF A NOTICE OF FEDERAL TAX LIEN
If the taxpayer is transferring ownership of property, the taxpayer may apply for a Certificate of Discharge. Each application for a discharge of a tax lien releases the effects of the lien against one piece of property. When certain conditions exist, a third party may also request a Certificate of Discharge. For further information refer to Publication 783: Instructions on how to apply for a Certificate of Discharge of property from the federal tax lien and Publication 4235: Technical Services Advisory Group Addresses.
VI. SUBORDINATING THE IRS LIEN
Creditors may refuse to extend credit to the taxpayer unless their lien will be satisfied prior to the federal tax lien. Subordination is the process that can make a federal tax lien secondary to another lien in cases in which notice of the federal tax lien has been filed prior to the creditor’s lien being perfected.
For further information refer to Publication 784: How to Prepare Application for Subordination of Federal Tax Lien and Publication 4235: Technical Services Advisory Group Addresses.
VII. WITHDRAWING LIENS
The IRS may withdraw a filed notice of Federal Tax Lien if the:
The IRS will provide a copy of the withdrawal, and if the taxpayer sends a written request, the IRS will send a copy to other institutions that the taxpayer indicates. In any case in which a taxpayer believes a federal tax lien to have been filed against him or her in error, the taxpayer can request a Certificate of Non-Attachment. For further information, refer to Publication 1024: How to prepare application for Certificate of Non-Attachment of Federal Tax Lien and Publication 4235: Collection Advisory Group Numbers and Addresses.