Under IRC § 6325(a)(1), a certificate of release of lien must be issued within thirty (30) calendar days after determining that the taxpayer’s outstanding obligation covered by the NFTL (including any interest, additional amount, addition to the tax, or assessable penalty, together with any additional costs that may have accrued) is fully satisfied.

Modules may be satisfied by payment or by adjustment/abatement to the taxpayer's account.

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The starting time for the 30-day release period is affected by the type of satisfying transaction. See Exhibit 5.12.3-1 for a listing of satisfaction types and how the 30 days is generally calculated.

A release must be manually requested whenever all the liabilities of a NFTL on NMF periods are fully satisfied.

The term "unenforceable" means unenforceable as a matter of law and not merely uncollectible. Most commonly, "unenforceable" pertains to the passing of the Collection Statute Expiration Date (CSED).

NFTLs filed on Form 668(Y)(c), Notice of Federal Tax Lien, show a "Last Day for Refiling." Language on the form states that if the NFTL is not refiled by that date, the lien shall be considered to be released. This is known as a self-releasing lien. Generally, the self-release feature of the NFTL is utilized when a liability is no longer enforceable. See IRM 5.12.3.4.1.1, Self-Releasing Lien.

Issue a release of a lien within thirty (30) calendar days of accepting a bond securing the payment of the amount assessed (including any interest, addition to tax, assessable penalty, together with any accrued costs) within the time agreed to in the bond, but not later than six months before the expiration of the statutory period for collection. See IRC § 6325(a)(2).

The bond must be executed by a surety company holding a certificate of authority from the Secretary of the Treasury, or, at the discretion of the area director, collateral may be accepted within established limits (see IRC § 7101 and IRC § 7102).

A listing of approved sureties is contained in Department Circular 570, Treasury's Listing of Approved Sureties, which is available on the internet at www.fms.treas.gov/c570. See IRM 5.6.1.2.1, Bonds. The acceptability of a surety, other than a Treasury approved surety, must be determined on a case by case basis.

Bonds, letters of credit and other types of securities may be accepted in lieu of filing NFTLs. See IRM 5.6.1.2, Types of Acceptable Securities, and IRM 5.12.10, Lien Related Certificates, for additional information regarding collateral agreements

ALS is the system designed to house information relative to NFTLs that have been filed. The CLO has primary responsibility for the maintenance of ALS data.

The majority of certificates of release are systemically generated through ALS after its weekly interface with Master File; however, certificates of release can also be generated when release data is manually input to ALS. This is done when there is insufficient time to wait for systemic processing or the systemic release will not be accomplished within thirty (30) days of the satisfaction date. Releases manually input are printed and mailed by CLO in accordance with standard procedures.

To request a lien release be manually input to ALS, prepare Form 13794, Request for Release or Partial Release of Notice of Federal Tax Lien, and forward it via secure email to the CLO team assigned to the state where the NFTL is filed. CLO teams can be found on the Who/Where tab on SERP.

Certificate issuance should be approved prior to ALS input. Therefore, documents can be generated and mailed without contacting the functional manager.

When release information is input to ALS, basic audit trail data is captured as well as how the lien was satisfied, the requesting employee, and the approving official. The release is assigned to the manager’s queue for electronic signature and is produced after it has been approved.

Upon approval in the ALS manager's queue, the release is printed and batched for mailing in accordance with CLO printing routines. See IRM 5.19.12.3, Document Printing.

In situations where a release is manually issued, a copy of the Form 668(Z) and issuance information must be provided to CLO so that ALS may be updated.

In situations where a certificate of release needs to be manually prepared in the field, use Form 668(Z) from the ICS templates or the PDF fillable format on the intranet.

Prepare the form so that the data matches exactly the information on the NFTL.

Depending on the circumstance, the certificate may be forwarded to CLO to be included in the next mailing to the recording office or issued directly to the taxpayer or their representative for filing.

Delegation Order 5-4 in IRM 1.2.44.5 contains a complete list of positions authorized to approve releases of lien.

When a taxpayer requests an immediate lien release in exchange for a full payment of the liability, ensure that the payment does satisfy the liabilities and that it is made by a method described in IRM 5.12.3.3.1.1, Liability Satisfied by Payment.

Prepare Form 668(Z), Certificate of Release of Federal Tax Lien, in accordance with IRM 5.12.3.4.2, Manually Preparing a Certificate of Release.

Provide the original Form 668(Z) to the taxpayer with Notice 48, Instructions for the Certificate of Release of Federal Tax Lien. Advise the taxpayer that they must file the certificate and pay the filing fee charged by the recording office. If the taxpayer does not want to pay the filing fee, advise that the IRS can file the certificate following standard processing.

Document the ICS history that the release was given to the taxpayer to record themselves. If the release is given to another person, document the name, phone number and other identifying information in the history.

Forward a copy of the Form 668(Z) to CLO via secure email so that the ALS database can be updated. In the email, include the following information:

Lien release requests may be received verbally, by fax, or in writing from taxpayers, their representatives, or other interested third parties. The request must at the minimum provide the following information:

Request additional information as needed, such as a copy of the canceled check or other proof of payment.

Incomplete requests should not be summarily rejected because the timely issuance of the release may be affected. Notify the requestor when additional information is needed to identify the NFTL to be released. Provide Pub 1450, Instructions on How to Request a Certificate of Release of Federal Tax Lien, as needed to explain the required content of the request.

Upon receipt of a properly completed request, determine if the modules subject to the NFTL have been satisfied and whether a release has previously been issued.

If the release request is not appropriate, notify the requestor of the reason why a certificate of release will not be issued.

If the release is appropriate, manually request a release through ALS or manually issue a certificate of release as the situation warrants.

When an offer in compromise (OIC), including a collateral agreement, is accepted, the NFTL is released upon payment of the offered amount.

Requests for the issuance of a certificate of release may be made by OIC units with ALS access.

OIC managers with access to ALS may approve the issuance of a certificate of release on the ALS system for a joint liability only when the OIC has been accepted from both taxpayers.

OIC Units without ALS access secure email or FAX a Form 13794 to CLO.

OIC unit managers may issue a certificate of release when extenuating circumstances exist, e.g., innocent spouse, non-petitioning spouse, co-obligors, etc. See Exhibit 5.12.3–3. Use the procedures in (4) above for requesting the release.

Follow the procedures in the chart below after verifying the liability has been satisfied.

A certificate of release should be requested for the non-paying officer(s) on a trust fund recovery penalty assessment when one officer has paid the liability in full. This will be done even though the liability has not been abated pending the expiration of the statutory period during which a claim for refund by the paying officer may be made.

When an adjustment is made to a module to reduce the tax liability to zero, the taxpayer may still be liable for the fee assessed to the account for the filing of the NFTL (TC 360). The abatement of the NFTL filing fee is dependent on the nature of the underlying assessment and other case facts.

The determination to abate the TC 360 NFTL fee should be made on a case by case basis considering the situation surrounding the adjustment and utilizing the best judgment of the employee assigned the account. Generally, the determination should follow the table below. Consult with Advisory if assistance is needed with the determination.

See IRM 5.1.15, Abatements, Reconsiderations and Adjustments, for abatement procedures.

When one party on a jointly-filed NFTL files bankruptcy and is discharged or makes an OIC that is accepted, a TC 971 is posted to the jointly-owed module to trigger the splitting of the account (TC 400), e.g., the one MFT 30 module now becomes two MFT 31 modules. Generally, Master File uploads the partial satisfaction code to ALS and a partial release is systemically generated within the required time frame.

Employees monitoring the cases must ensure releases are issued timely. A manual request for release should be submitted when the partial release will not be issued within thirty (30) calendar days of the satisfying event.

ALS generates partial releases showing special wording to identify the partial release situation. In the unusual instance where a partial release must be manually prepared, the Form 668(Z) must identify the person being released and the special wording must be included. See Exhibit 5.12.3–2.

IRC § 6015 grants relief to a spouse when it is determined that he or she is not liable for all, or part, of a joint liability.

When a determination has been made that one spouse is not liable for the joint assessment, a partial release should be issued for the taxpayer who is not responsible for the liability.

Partial releases can be generated through ALS. Special wording is affixed to the generated document to clearly identify the innocent spouse.

In the rare instance where a partial release must be manually prepared, the person being released must be clearly identified in the name section and the following special wording must be included in the body of the Form 668(Z):

If the original assessment was completely abated but the NFTL filing fee (TC 360) was not systemically abated, abate the NFTL fee from the innocent spouse's account.

See IRM 25.15.8, Revenue Officer Procedures for Working Innocent Spouse Relief Cases, for further guidance on working Innocent Spouse cases.

Occasionally the certificate of release cannot be located by the recording office even though ALS shows that the release was issued. Requests for copies of releases are routinely received by CLO from taxpayers or their representatives, but sometimes are received by revenue officers.

The original copy of the certificate of release can be reprinted through ALS by CLO. Request CLO reissue the release to the recording office.

Filing fees should not be posted to the taxpayer's account.

If a taxpayer is waiting on the certificate, manually prepare the certificate and inform the taxpayer that they can take the copy to the recording office, however, they are responsible for paying the filing fee. Provide the taxpayer with a copy of Notice 48.

Request an ALS history be input indicating the date and to whom the release was provided.

Occasionally the IRS is contacted by a recording office or another third party to verify the validity of a lien certificate that was issued. Although unusual, situations may be found where the certificate was not authorized by the IRS.

Secure a copy of the document that was recorded and other relative information about the taxpayer's account.

Notify TIGTA of the situation.

Unless advised not to do so by TIGTA, contact the recording office to see if they can reverse their records regarding the release. Incorporate the assistance of Area Counsel as needed.

Depending on the situation, it may be necessary to file a revocation of the release and a new NFTL. Work with Advisory and Counsel on an appropriate remedy to the situation.

Advisory is responsible for making IRC § 6326 determinations.

When an erroneous NFTL is identified in the field, ACS, or other function, a memorandum outlining the facts and recommending the release should be immediately prepared and forwarded to Advisory. When circumstances dictate immediate action, the facts of the case may be given to Advisory by telephone; however, the memorandum must still be prepared and forwarded to Advisory.

Requests for an administrative appeal under IRC § 6326 must:

If the request does not meet the administrative appeal criteria, respond to the appealing party using Letter 2423, Acknowledgement and Partial Denial of Administrative Appeals Request.

Advisory reviews the request memorandum and conduct additional research, as needed, to determine whether the filing of the NFTL was erroneous. Advisory responds within thirty (30) calendar days to all requests that meet the criteria.

Advisory must initiate an interim reply letter when it is not possible to meet the 30-day response date. Additional interim letters are sent if necessary. An interim letter must:

After reviewing the request, Advisory takes action according to the table below.

If the appeal is denied, inform the taxpayer using Letter 2423.

Issue a special-worded Form 668(Z), Certificate of Release of Federal Tax Lien, within fourteen (14) days, or as expeditiously as possible, after making a determination that the filing of the NFTL was erroneous.

Releases of erroneous NFTL filings should be prepared through ALS by CLO or Advisory.

In rare circumstances, it may be necessary to manually prepare the release document. If manual preparation is needed, Advisory should take the following actions.

In certain situations a partial release of an erroneously filed NFTL may be needed. This would occur when the NFTL was filed showing more than one party but the filing was erroneous under IRC § 6326 with respect to some, but not all, of the parties.

Letter 544, Letter of Apology - Erroneously Filed Notice of Lien, is not printed through ALS and must be manually prepared. The letter should be signed by the Advisory group manager and forwarded to the taxpayer (or designated POA) with a copy of the certificate of release.

At the taxpayer’s written request, a copy of the release and letter of apology may be furnished to creditors or credit bureaus. Instruct the taxpayer to provide names, mailing addresses, and permission to disclose the information.

Abate filing and release fees on erroneously filed NFTLs. Follow standard procedures for requesting an adjustment to the account.

Reverse the Lien Filed Indicator by inputting TC 583 dc 04.

Notify the office assigned the taxpayer's account of the determination and take necessary action to update IDRS, if needed.

In the event an Erroneous NFTL Release is needed but a regular Certificate of Release is issued without the special wording for an Erroneous NFTL Release, take one of the following actions:

The Service may rescind a CDP notice properly issued under IRC § 6320(a) when certain conditions apply. See IRM 5.12.9.6.6, Rescission of CDP Rights for Withdrawals, for further details.

Rescission of the CDP notice is not necessary if the lien is released under IRC § 6326(b). If the tax has been satisfied, then the Service can no longer pursue collection and no NFTL can be filed in the future. If the underlying assessment is invalid, the taxpayer would be entitled to a new CDP notice when a new assessment is made and a new NFTL filed.

When it has been determined that the liability(s) covered by the NFTL was assessed against the taxpayer due to return preparer misconduct, the NFTL may be released as an erroneous NFTL filing.

The Advisory office where the taxpayer resides has primary responsibility for processing releases for NFTLs deemed erroneous due to return preparer misconduct.

Upon notification of the abatement determination, Advisory follows the procedures in IRM 5.12.3.9, Erroneously Filed Notice of Federal Tax Lien, to issue the release of the erroneous NFTL. All NFTLs covering the impacted assessments, regardless of where the NFTLs were filed, should be addressed.

A release of erroneous NFTL should only be issued in this situation if all the assessments on the NFTL were impacted by the misconduct and the taxpayer does not owe for any of the assessments.

The office approving the release of erroneous NFTL (usually Advisory) is responsible for requesting abatement of the NFTL filing fee (TC 360), when appropriate, and issuing Letter 544.

A withdrawal of the NFTL may be considered in lieu of the release or after the release, if requested by the taxpayer.

In the event an erroneous NFTL release is appropriate but a regular Certificate of Release is issued without the special wording for an erroneous NFTL release, take one of the following actions:

Treasury regulation 301.7432-1 details the administrative claim procedures of IRC § 7432.

There is no standard form used for preparing a claim; However, it must contain the following information:

Forward the administrative claim to the Advisory Group Manager in the area office where the taxpayer currently resides. Each claim is reviewed by Advisory to ensure that it contains the required information.

If the claim does not contain the information required in (2) above, notify the taxpayer in writing within fourteen (14) calendar days advising of the deficiencies and that the claim is not processable.

Use Letter 2730, Non-processable Claim for Damages Letter, to notify the taxpayer of any claim deficiencies.

Administrative review of the claim must be completed within thirty (30) calendar days of receipt of a processable claim. The taxpayer may bring suit either upon:

A taxpayer must file an action in federal district court within two years after the cause of action accrues. If the taxpayer files an administrative claim within the last thirty (30) calendar days of the two-year period of limitations, the taxpayer may file an action in federal district court any time after the administrative claim is filed and before the expiration of the period of limitations, without waiting for 30 calendar days to expire or for a decision to be rendered on the claim.

Use Letter 2732, Notification of Full or Partial Denial of Claim for Civil Damages, or Letter 2733, Notification of Full or Partial Allowance of Claim for Civil Damages, to notify the taxpayer of the results of the administrative review of the claim. If only a portion of the claim is approved, both pattern letters are sent to the taxpayer at the same time. These letters are signed by the Advisory Territory Manager who has the delegated authority to approve or reject the claim. See Delegation Order 5-4.

There is no administrative appeal of a rejected claim for damages under IRC § 7432, however, the taxpayer may bring a civil action for damages in a district court of the United States.

If the taxpayer files suit under IRC § 7432, see IRM 25.3.3.9, Damages - Civil Cause of Action for Unauthorized Collection Action, for guidance in responding to the filing.

Date stamp the claim upon receipt. Advisory should complete the review within thirty (30) calendar days of receipt.

Open an Non-Field Other Investigation (NFOI) on ICS under 101 (Claim- Other) no longer than five (5) business days after receipt of the claim in the group. Review ICS closed files for any prior claims.

Address the following issues in determining if a claim is administratively allowable:

Evaluate the facts and circumstances of each case.

If the claim is made without proof or proper substantiation of damages, the taxpayer should be contacted immediately and told of the requirement to provide verification that these damages have been incurred. The Advisor charged with reviewing and making the initial determination should approach this task with the recognition that it is possible that actual economic damages can accrue as a result of untimely lien releases. When faced with issues that do not present a clear-cut solution, consult with Area Counsel.

The reviewer must determine if the IRS knowingly or negligently failed to release a lien under IRC § 6325 and whether the failure caused direct economic damages which the taxpayer could not avoid.

The reviewer must ascertain the point in time when the taxpayer became, or should have become, aware of the violation for the purpose of determining if the claim should be rejected for untimeliness.

The amount of an approved administrative claim awarding damages is guided by the following criteria:

Area Counsel must review and concur with all claim determinations.

Release the NFTL if it is determined the IRS knowingly or negligently failed to release the NFTL under IRC § 6325.

The advisor or reviewer provides written notification to the taxpayer of the determination.

Advisory takes the appropriate closing or other follow-up actions no later than ten (10) calendar days of completion of the initial review.

If an administrative claim is submitted to the approving official, Collection personnel involved with the filing or release of the NFTL may be asked to prepare a memo explaining the facts of the case. This should include any documentation which confirms or contradicts the taxpayer’s statements.

If a claim is approved, prepare the following:

Forward the original voucher (FMS Form 197) for signature to the taxpayer under cover Letter 2733, Notification of Full or Partial Allowance of Claim for Civil Damages.

When the signed form is returned by the taxpayer, the approving official signs FMS Form 197 and provides the taxpayer with a copy.

Use Letter 2734, Processing Letter for Financial Management Services Claim Group, to forward the original forms listed in (2) above to the:
Department of the Treasury, Judgment Fund Branch
Financial Management Service
3700 East-West Hwy, Room 6E15
Hyattsville, MD 20782

If the taxpayer requests a check in lieu of electronic deposit, FMS returns the check to the contact person listed on FMS Form 196 who forwards the check to the taxpayer.

Mail the check to the taxpayer with a cover letter (locally designed) that specifies the date and the amount of the check.

Keep a copy of the forms sent to the Judgment Fund Branch in the file. Record any information received from FMS regarding payment to the taxpayer on ICS.

Advisory has primary responsibility for approving revocations of erroneous lien releases. except for those pertaining to an on-going insolvency case or those related to a case actively assigned to Field Collection. See IRM 1.2.44.5, Delegation Order 5-4 (Rev. 3).

Upon identifying an erroneous lien release, research the liabilities secured by the NFTL to determine if a revocation of the release is appropriate. Factors to consider include:

To request a Revocation document, complete the Form 14466, Request for Revocation of Erroneous Release of Federal Tax Lien.

If multiple NFTLs were erroneously released on the same taxpayer, revocations need to be requested for each released lien; however, the modules on those released NFTLs can be combined on one new NFTL.

For cases not actively assigned to Field Collection or Insolvency, forward revocation requests by secure email to the Advisory Group for your Area for approval. Include the Form 14466, copy of the released NFTL from ALS, and narrative.

Advisory takes the following actions on revocation requests.

Disapprovals are returned to the originator with an explanation. No further actions are necessary unless additional information is provided and Advisory’s decision is reversed.

Advisory indicates its approval on the Form 14466 and forwards the request by secure email to Centralized Lien Processing (CLO) for input to ALS. For any revocation requests not properly approved, CLO returns the request to the originator for proper routing.

At their discretion, Advisory or Insolvency employees who have the necessary permissions may input the revocation, including partial revocations, directly on ALS.

For revocations related to a case actively assigned to a GS-9 revenue officer or above, the RO may sign the Form 14466 as the approving officer, bypass Advisory, and send Form 14466 via secure email directly to the CLO for input to ALS.

Generally, the taxpayer’s copy of the revocation document is printed and mailed to the taxpayer by CLO; however, it is the responsibility of the originating employee to ensure this has been done.

Taxpayers may appeal revocations of releases under the Collection Appeal Program (CAP). See IRM 5.12.3.16, Re-establishing NFTL Priority.

The originator of the revocation request can monitor the status of both the revocation and any new NFTL by checking ALS.

If exigent circumstances exist, the revocation and new NFTL may be manually prepared and filed.

Issue a partial revocation when:

Partial revocations should be completed on ALS.

Partial revocations and the subsequent new NFTL filing are processed according to standard procedures.

The requesting employee prepares and sends the Form 14466 as described in IRM 5.12.3.14.1, Requesting Revocation of Lien Release.

If it is necessary to manually prepare the partial revocation, the IRS Intranet or ICS template versions of Forms 12474 and 12474-A may be used.

If manually prepared, secure approval of the partial revocation and, if appropriate, scan and secure email the completed document to CLO for filing. Revocations created using ALS go to the manager's queue for approval.

In certain circumstances, it may be necessary for notice of the revocation to be manually filed. Follow normal procedures for filing any lien document.

In manual file situations, the taxpayer's notice of the partial revocation is issued by the approving office.

Neither the IRC nor Treasury regulations address the method in which lien certificates are to be signed; however, they both address the Secretary’s authority to develop procedures associated with the use and acceptability of electronic signatures on forms and other documents.

Approval of documents must always be in accordance with IRM 1.2.44.5, Delegation Order 5-4 (Rev. 3).

Revocation documents may be signed by the approving official via electronic means when a physical signature is not feasible.

To sign a document electronically, the document must be converted to a Portable Data Format (PDF) using Adobe Acrobat and the approving official must create a signature file. The format of the electronic signature should adhere to certain standards.

Approval must be granted on a case by case basis. The ICS history must be documented by the approving official to indicate the electronic or facsimile signing of the lien certificate and associated correspondence.

A printed copy of the electronically signed certificate must be retained as part of the case file for appropriate record keeping.

There may be hesitation from some recording offices to accept electronically signed lien certificates; however, they cannot refuse to record the documents as the IRS dictates the form and content of lien certificates. Recording offices may be referred to Pub 1468, Guidelines for Notices of Federal Tax Lien and Centralized Lien Processing, for more information.

Facsimile signatures must be protected in accordance with established IRS procedures.

On rare occasions, a systemic problem on ALS or its interface with Master File may possibly result in a batch of erroneous releases. The procedures contained in this section reflect general guidelines that may be used to resolve the situation, but the process may vary based on the number of NFTLs involved.

Determinations regarding necessary actions if such an event occurs requires teamwork of many functions, and may include:

When multiple erroneous releases are issued due to a system problem, ALS programming staff must be alerted.

ALS programming staff can generate a list of the NFTLs released in error. If the erroneous releases cannot be isolated by ALS, the programming staff can generate a list of all releases issued within the affected time frame.

ALS programming staff send the list of releases via secure email to a team comprised of representatives of various impacted offices, such as those shown in (2) above.

The team may review the list to:

Using research tools at its disposal, the team may ascertain information about the erroneous released NFTLs including, but not limited to the:

The team may separate the list of erroneous released NFTLs based on their status codes and distribute the lists to the Technical Analysts of the respective functions. For example:

The Analysts for each function may further distribute the lists to the employees or offices assigned the cases so that revocation and new NFTL determinations can be made. The revocation process set forth in 5.12.3.14 above will be followed to file the notices of revocation and new NFTLs.

The team may review the list of remaining releases to determine if notices of revocation are appropriate.

For those cases on which a revocation is appropriate, the team may conduct additional research as necessary to make determinations for new NFTL filings

The team works with CLO to ensure that notices of revocation are processed and, if appropriate, new notices of lien are created using the last known address information of the taxpayers.

Notice of the revocation must be filed in all the same offices where the original NFTLs were filed, unless the state has since redesignated its filing office for the specific type of property. The Uniform Federal Lien Act of the state should be checked to confirm where to file the notice.

In the unlikely event that the notice of revocation cannot be filed in the office designated by State law, it is to be filed in the office of the clerk of the United States district court for the judicial district in the State office where NFTLs are filed.

When filing a notice of Revocation and a new Notice of Federal Tax Lien, documents must be recorded in the proper order to be valid. The notice of Revocation must be recorded prior to the new Notice of Federal Tax Lien.

Expenses related to the filing of the revocation document are borne by the government. The cost of subsequently filing a new NFTL is assessed to the taxpayer's account.

When a revocation of release was issued but a new NFTL was notfiled, the statutory lien is, nonetheless, reinstated.

When the liability is subsequently satisfied, whether by payment, adjustment, statute expiration or other event, a new certificate of release of lien is not required; however, one may be issued if requested by the taxpayer.

If it is determined that a certificate of release should be issued based on a taxpayer's request, take the following actions.