Federal tax liens exist by operation of law. The Internal Revenue Code (IRC 6321) states: "if any person liable to pay any tax neglects or refuses to pay the same after demand, the amount ... shall be a lien in favor of the United States upon all property and rights to property..."

The federal tax lien, which is sometimes called the "statutory lien" , is the basis for the government’s claim against the taxpayer’s property as it attaches all the taxpayer’s property and rights to property, both tangible and intangible, both currently in existence and acquired in the future. The lien exists until the liability for the amount assessed is satisfied or becomes unenforceable.

While the federal tax lien protects the government’s interest, a Notice of Federal Tax Lien (NFTL) is filed for the federal tax lien to compete with certain classes of creditors (IRC 6323). The NFTL is a document filed with state and local jurisdictional recording offices to put third parties on notice of the government’s outstanding lien against the taxpayer’s property.

The presence of an NFTL protects the federal tax lien and when property attached by the lien is being sold or used as collateral, the government’s claim has to be addressed. Occasionally, the lien also has to be addressed when it is mistaken to attach property belonging to a third party. This IRM discusses the options available when situations like these arise.

Authorities relative to federal tax liens are found in the following IRC and Treasury Regulations sections.

The following Policy Statements and Delegation Orders regulate NFTL filings.

The Director, Collection Policy is responsible for overseeing the policies and procedures regarding NFTLs and related certificates.

Collection Policy, Enforcement is responsible for development and delivery of policies pertaining to the lien program.

Employees who review and process lien related certificates are responsible for ensuring procedures are properly followed.

Managers are responsible for ensuring employees are duly delegated to make lien certificate decisions and that their actions are in accordance with policy and procedures.

Other roles and responsibilities related to the lien program can be found in IRM 5.12.1.5, IRS Organizations Working Lien Issues, and its subsections.

NFTL activity is reviewed and documented in numerous ways, including those shown on the following table.

Lien certificate requests worked by Field Collection are generally controlled and documented through the Integrated Collection System (ICS).

Management ensures compliance with policy and procedures through case reviews and operational reviews.

IRM 1.2.2.6.4, Delegation Order 5-4, Federal Tax Lien Certificates, stipulates the IRS positions authorized for lien activities.

Access to systems used in the NFTL process is controlled following standard access guidelines through the Business Entitlement Access Request System (BEARS, formerly Online 5081). The primary systems used when working lien related certificates include, but are not limited to:

Closed records associated with NFTL determinations are retained in accordance with Document 12990, Records Control Schedules, the Internal Revenue Service Records Control Schedule (RCS 28), Tax Administration - Collection.

The table below differentiates between key terms used in the lien program.

The table below lists common acronyms used in the lien program and throughout this IRM.

The term "non-attachment" may be spelled with or without a hyphen ("nonattachment" ). In this IRM, the hyphenated version is used.

See IRM Exhibit 5.12.1-2, Glossary of Common Acronyms in IRM 5.12, for a listing of other terms and acronyms used in federal tax lien program.

The form used to provide notice of the lien is Form 668(Y) (C), Notice of Federal Tax Lien. The form, when properly annotated, is also used for NFTL variations, including amended and special condition NFTLs.

The certificates used to address the attachment of the federal tax lien, or the priority of its attachment, to identified property are in the Form 669 series and specified throughout this IRM. These certificates are not systemically generated and are normally processed through Advisory.

IRM 5.17.2, Legal Reference Guide for Revenue Officers, Federal Tax Liens, provides additional details about lien law such as the types of property subject to the federal tax lien and the priority of the federal tax lien versus other competing encumbrances.

IRM 5.12.1, Lien Program Overview, provides additional information, websites, and job aids related to the lien program.

Links to tools and references to assist IRS employees with lien processes may be found on the SBSE Collection page on IRS Source (https://irssource.web.irs.gov/SBSE/Pages/Collection.aspx). Similar information for taxpayers may be found on the Understanding a Federal Tax Lien page on IRS.gov (https://www.irs.gov/businesses/small-businesses-self-employed/understanding-a-federal-tax-lien).

This IRM is for procedural use and does not provide detailed instruction on the use of any system. User Guides such as the ICS User Guide should be consulted, as needed.

Taxpayer rights with regard to IRS processes are stipulated in IRC 7803(a)(3) and on the Taxpayer Bill of Rights intranet page (https://irssource.web.irs.gov/SitePages/TaxpayerBillOfRights.aspx). Specific rights regarding lien processes are referenced throughout this IRM, as needed.

A certificate of discharge may be issued if it is determined that the remaining property of the taxpayer has a fair market value that is double the sum of the amount of the federal tax lien plus other encumbrances with priority over the federal tax lien.

Issuance of a certificate of discharge under this provision should address the best interest of the government.

An application under IRC 6325(b)(1) is not considered unless the taxpayer:

Issue Form 669-B covering any part of the property subject to the federal tax lien if an amount is paid in partial satisfaction of the liability secured by the lien. The amount cannot be less than the value of the government’s interest in the property to be discharged and the taxpayer must be divested of all interest in the property.

Foreclosing mortgagees may use this administrative provision rather than joining the United States as a party in a judicial foreclosure action. The discharge of property from the lien eliminates the government's right of redemption if the United States were joined as a party defendant. See 28 United States Code (U.S.C.) 2410(c).

In determining the value of the government’s interest in property to be discharged from a federal tax lien under IRC 6325(b)(2), consideration may, in certain situations, be given to the "forced sale value," as distinguished from the "fair market value" of the property.

Reasonable and necessary expenses, including fees and taxes that are treated as expenses of sale, are allowed in calculating the amount necessary for discharge of the property from the lien. See IRM 5.12.10.7.4, Allowable Expenses, for further details.

If sale preparation expenses are incurred (sometimes called "staging" expenses by realtors) and it is demonstrated that they either hastened the sale or increased the amount received at sale, then allow the expenses. In particular, if prevailing economic conditions are poor and "staging" assists in selling a property, providing a taxpayer with an avenue to make payment on their taxes, allow these expenses so long as the expense is reasonable and ordinary in the state where the property was, or is being, sold.

Under no circumstances will the determined interest of the United States, payment of which interest is necessary for issuance of a discharge under IRC 6325(b)(2)(A), be reduced in order to allow payment to an interest that is junior to the federal tax lien.

Because making an application and deposit (or providing a bond) under IRC 6325(b)(4) provides a judicial remedy not available for an application and payment made under 6325(b)(2)(A), third-party owners of property applying for a certificate of discharge under 6325(b)(2)(A) must waive, in writing, their rights to make a deposit allowed under 6325(b)(4) and to file suit for return of the deposit or accepted bond allowed under IRC 7426(a)(4)

Unless the waiver has been provided in writing, the IRS will treat an application made by an owner of the property (other than the taxpayer) as an application made under 6325(b)(4) with all funds treated as a deposit. For the required waiver language, see IRM 5.12.10.3.5.2, Application for IRC 6325(b)(4) Discharge.

Issue Form 669-C when it is determined that the interest of the United States in the property subject to the federal tax lien is valueless.

Foreclosing mortgagees may use this administrative provision rather than joining the United States as a party in a judicial foreclosure action. The discharge of property from the lien eliminates the government's right of redemption if the United States were joined as a party defendant. See 28 U.S.C. 2410(c).

In determining the value of the government’s interest in property to be discharged from a federal tax lien under IRC 6325(b)(2), consideration may be given to the "forced sale value," as distinguished from the "fair market value" of the property.

Issue a certificate of discharge under IRC 6325(b)(3) on any part of the property subject to a tax lien if the property is sold and the Internal Revenue Service agrees that the proceeds of the sale are to be held as a fund subject to the liens and claims of the United States in the same manner and with the same priority as such liens and claims had with respect to the discharged property.

If property has been sold pursuant to a substituted sales agreement with the IRS, any third party who claims an interest to all or any part of the funds may, within nine (9) months after the date of the agreement, bring suit in a district court of the United States under IRC 7426(a)(3).

Consult Counsel to review any proposed escrow agreements.

Reasonable and necessary expenses incurred in connection with the sale of the property or administration of the sale proceeds will be paid from the proceeds of the sale before the satisfaction of any claims. See IRM 5.12.10.7.4, Allowable Expenses.

A third-party owner has the right under IRC 6325(b)(4) to receive a certificate of discharge on any property subject to a federal tax lien if the third-party owner:

The deposit described in (1)(a) above can be cash, cashier's check, certified funds, or a bond as described in IRM 5.6.1, Collateral Agreements and Security Type Collateral.

All amounts received based on third party applications for the issuance of a discharge are treated as deposits under IRC 6325(b)(4), unless a written waiver is received.

For a cashier's check, cash, or other type of certified funds received, take the following steps.

Follow established procedures for processing and disposition of any bond received (IRM 5.6.1.3.1, Bonds). Advisory procedures are found in IRM 5.6.1.6, CEASO Actions.

A control number is assigned by the Campus.

The third-party owner may request the return of the deposit or a release of the bond on the grounds that the IRS determination of value is incorrect.

Third-party owners have 120 calendar days after the day the certificate of discharge is issued to file a civil suit. If suit is not filed, the IRS has sixty (60) calendar days to apply the deposit or collect on the bond, and refund any excess amount. See IRM 5.12.10.3.5.3, Disposition of Deposit.

The applicant should be advised that the judicial provisions of IRC 7426(a)(4) are the exclusive remedy for seeking the return of funds deposited under IRC 6325(b)(4). An administrative levy claim or a wrongful levy suit under IRC 7426(a)(1) are not available. See Rev. Rul. 2005-50.

When the case is resolved, prepare the necessary documentation to have either all or part of the money refunded to the third party or applied to the taxpayer's account.

A third party who co-owns property with the taxpayer may request a discharge under this provision; however, the taxpayer may not use this provision.

Third-party owners of property applying for a certificate of discharge under 6325(b)(2)(A) must waive, in writing, their rights to make a deposit allowed under 6325(b)(4) and to file suit for return of the deposit or accepted bond allowed under 7426(a)(4). Unless the waiver has been provided in writing, the IRS will treat an application made by an owner of the property (other than the taxpayer) as an application made under 6325(b)(4), with all funds treated as a deposit.

See IRM 5.12.10.3.5.5, Suspension of Running of the Statute, for effect on the statutory period of limitations.

As indicated above, there are several provisions for issuing a certificate of discharge. Although each is different, some factors should always be considered.

Follow guidance outlined in this IRM and Pub 783 when providing information regarding applications for discharge of property from the federal tax lien.

Conduct full compliance checks when applications for discharge are submitted by taxpayers. If taxpayers are not in full compliance with filing and payment requirements, request returns be filed and balance due accounts paid; however, process discharge applications regardless of compliance check outcomes unless information received indicates that the discharge itself is not in the best interest of the government.

Field Revenue Officers receiving applications for discharge relative to cases in their inventory should take the actions described below.

When making discharge determinations in states that allow "entireties" ownership and the lien is only against one of the owners, the government’s interest is generally determined to be one half of the value of the property. For example, under IRC 6325(b)(2)(A), the taxpayer generally must pay the IRS one-half the proceeds of the sale in partial satisfaction of the liability secured by the federal tax lien.

Calculating the interest of the government in a discharge situation generally begins with the fair market value (FMV) of the property. FMV is often described as what a willing buyer offers to pay a willing seller in an "arm's length" transaction; however, other factors may be present that inappropriately impact that definition, such as a relationship between the buyer and seller, an attempt to quickly sell the property to defeat the efforts of a creditor, etc. FMV is best determined by considering at least one appraisal by a disinterested third party along with other sources of valuation deemed appropriate by the approving official.

Approval of discharges is delegated to Advisory and Insolvency Group Managers. See IRM 1.2.2.6.4, Delegation Order 5-4, Federal Tax Lien Certificates.

The bankruptcy court has inherent power to sell property within its jurisdiction free and clear of liens. Therefore, when a sale is made upon the order of a bankruptcy court, its purchaser takes the property unencumbered by the federal tax lien, and the federal tax lien should be considered transferred to the proceeds of the sale.

When property is sold upon the order of a bankruptcy court and the purchaser applies for a certificate of discharge of property from the federal tax lien, advise the purchaser or other interested party to submit an affidavit to Advisory that contains a:

If it is determined that the application is sufficient, issue a certificate using the appropriate form.

A request for a certificate of discharge may be received from a taxpayer, mortgage holder, or other third party in conjunction with a foreclosure action. Among other issues, consideration should be given to the following factors:

The actions needed on a discharge request involving a foreclosure depends on factors such as the specifics of the sale, when the request is made, and what the government’s interest is in the property. The following charts summarize common situations and the actions generally needed when a discharge request is received.

Consult IRM 5.12.4, Judicial/Non-Judicial Foreclosures, and IRM 5.12.5, Redemptions, for more information on the foreclosure process. As needed, refer taxpayers to Pub 487, How to Prepare Application to Release Property Secured by Federal Tax Lien.

Occasionally, Advisory receives a recommendation for discharge or subordination from the Department of Justice (DOJ) in relation to a case they are litigating.

Advisory may provide feedback to DOJ as needed; however, because of DOJ's settlement authority over the litigation, Advisory must take any discharge or subordination action as directed by DOJ. See IRM 25.3.6, Open Litigation Controls, Monitoring and Closing Actions.

To reduce litigation costs and make property readily marketable, the Veterans Administration (VA), Small Business Administration (SBA), and Federal Housing Administration (FHA) have agreed to accept title to property subject to a junior federal tax lien, provided the payment (if any) required to secure a discharge of property from the tax lien does not exceed the increased cost which would be incurred by them if a mortgagee elected to foreclose by a judicial, rather than by a non-judicial, proceeding.

Upon receipt of such requests, the IRS will cooperate in discharging from junior federal tax liens property acquired by these agencies in connection with their Loan Guaranty or Direct Loan Salvage operations.

The procedures described in this section apply only to applications received from the VA, SBA, or FHA requesting discharge of property from a junior federal tax lien which has been or is to be acquired by one of those agencies.

Issue a certificate of discharge if a federal agency has foreclosed non-judicially and given adequate notice when the agency considers the NFTL to be a cloud on the title.

These procedures do not apply when the United States has already been joined as a party to a judicial foreclosure proceeding or when the insured mortgagee forecloses and has not assigned the mortgage or deed of trust to the VA, SBA or FHA.

When a discharge request is received for property owned by a deceased taxpayer, determine when the statutory lien arose, when the NFTL was filed, and what the status of the property was when the NFTL was filed.

A discharge request for a decedent’s property that is subject to the federal tax lien should be processed following standard discharge procedures.

Expenses related to the decedent's estate are known as "administrative expenses." When determining allowance for administrative expenses consider the factors outlined in IRM 5.5.2.6.1.1, Necessary Administrative Expenses.

Applications for discharge under IRC 6325(b)(2)(A), 6325(b)(2)(B), or 6325(b)(4) are sometimes submitted by third parties who either purchased property without having discovered a previously recorded NFTL or who purchased property at a foreclosure sale without the government having been properly noticed under IRC 7425. These buyers may claim a right of equitable subrogation to the extent of encumbrances they paid that had priority over the federal tax lien prior to the sale.

Few third parties meet the definition of a party entitled to rights of subrogation as defined by any state’s law. However, courts are highly inclined to expand the definition if it can be shown that a failure to do so will result in the unjust enrichment of one party at the expense of another. Therefore, unless the facts do not support an argument for equitable subrogation, or where such argument is clearly not supported by state law, claims of equitable subrogation in these cases will be recognized when calculating the government’s lien interest unless, based on local law, Area Counsel advises otherwise.

If a third party purchases a property without recognizing the attachment of the lien as described above, follow the general guidelines in this subsection to determine what the government's interest would have been had the IRS been involved in the transaction.

When an application has been received for property that was not transferred through foreclosure, take the actions described below.

When an application has been received for property that was transferred through foreclosure without the government having been properly noticed under IRC 7425, take the actions described below.

This type of subordination is generally used when the taxpayer is obtaining financing to pay toward the tax liability.

If a taxpayer seeks a certificate of subordination for the purpose of obtaining cash or paying other debts not secured by a senior lien on the property (e.g., in the case of a home equity loan), apply IRC 6325(d)(1) guidelines. Generally, payment of junior liens or non-secured debts is not allowed in the subordination process unless the payment ultimately enhances collection of the tax liability.

This type of subordination is generally used when the taxpayer is entering financing but is not making an immediate payment toward the tax liability. It is intended that this authority is used in situations similar to those in which an ordinary, prudent businessman would subordinate rights in a debtor's property in order to secure long-run benefits.

Issuance of a subordination under this section is allowable if it can be shown that:

The IRS applies this section for taxpayers seeking subordination of the federal tax lien in connection with a "dollar for dollar" refinancing of a senior lien. Any such requests though must still demonstrate a benefit to the government.

A subordination of the government’s lien interest in current and/or future accounts receivable to the security interest of a lender is allowable under IRC 6325(d)(1) or (2).

Subordination is a discretionary act. Generally, subordinations are issued only when it is in the best interest of the government.

Follow guidance outlined in this IRM and Pub 784, How to Prepare an Application for a Certificate of Subordination of Federal Tax Lien, when providing information regarding applications for subordinations.

Conduct full compliance checks when applications for subordination are submitted. If taxpayers are not in full compliance with filing and deposit requirements, request returns be filed and payments be current. Compliance checks should also include the taxpayer's proposal for resolving the outstanding tax liability.

Field Revenue Officers receiving applications for subordination relative to cases in their inventory should take the actions described below.

Approval of subordinations is delegated to Advisory and Insolvency Group Managers. See IRM 1.2.2.6.4, Delegation Order 5-4, Federal Tax Lien Certificates

Applications for certificates, together with all necessary documentation, should be directed to the Revenue Officer assigned the taxpayer's case, if applicable, or directly to the Advisory Consolidated Receipts Group (ACR).

Use ICS to control and monitor the case.

Document the date that the application was received when the case is opened on ICS.

Upon receipt, examine each application for completeness. If the application is incomplete or improper, the applicant should be contacted no later than twenty-one (21) calendar days from receipt of the package.

Do not reject applications for incompleteness unless the missing information will not allow for a thorough investigation. Every effort should be made to accept the application for processing, provided the information submitted would enable a proper investigation to be conducted.

The Advisory Group Manager may waive the appraisal requirement if other acceptable evidence of the value of the property is submitted.

See IRM 5.5.8, Advisory Responsibilities for Processing Estate Tax Liens, for guidance on evaluating discharge and subordination applications relating to estate tax liens.

In situations involving a foreclosure proceeding where a sale is pending, a recommendation for acceptance or denial should be made within fourteen (14) calendar days of receipt in the group of the complete application. In all other situations, the recommendation should be within thirty (30) calendar days, unless more expeditious action is necessary.

Document any cause of delay in the ICS history.

Upon receipt of an application, complete a thorough analysis to determine if there is a need for additional information.

When additional information is needed to make a determination on the application, contact the applicant no later than twenty-one (21) calendar days from receipt of the initial package. Depending on the extent of the information needed, any time constraints, and other factors, the additional information may be requested verbally or in writing. Letter 4025 or 4027 should be used for this purpose. Whether verbally or in writing, a deadline for response should be clearly communicated.

Generally, response deadlines should be thirty (30) calendar days; however, time-frames for action should be consistent with the facts of the case. For example, if a sale is pending, document the history regarding this fact, including the date of sale and schedule a timely follow-up action.

If additional information is not received by the established deadline, the application and case may be closed for insufficient information.

Should the taxpayer provide the additional information subsequent to the closing of the application, open a new control for the case and resume processing the application.

Advisory should use all available resources to determine whether to issue a certificate of discharge or subordination. If additional information is needed, the applicant should be contacted no later than twenty-one (21) calendar days from the receipt in the group of the initial package.

Verify the information submitted in the application by contacting any of the following, as needed:

For applications received in Advisory, initiate an OI if it is determined that a field investigation is required before a final decision can be made on the discharge or subordination request. If the application relates to a foreclosure proceeding, flag the application to indicate that the revenue officer's report must be returned to Advisory within seven (7) calendar days.

Applications which require a field investigation must be investigated promptly by a revenue officer.

Unless there is evidence the process might not involve an arm's length transaction, the appraisals submitted should normally be accepted and a separate investigation to determine the value of the property is not needed.

Escrow funds, a potential payment source, should be considered and accounted for when working discharge investigations. However, if during the course of the investigation it is disclosed that the senior encumbrance(s) exceeds the value of the property, it is not necessary to investigate and verify subsequent encumbrances, even if they were recorded prior to the filing of the NFTL.

When investigating applications in which the property is encumbered by a home equity line of credit, take the actions described below.

Evaluate the priority of all liens and judgments to determine the interests of the government in the property. See IRM 5.17.2 for further information on priorities and consult Area Counsel, as needed, for questionable situations.

If the taxpayer/applicant misses any established deadline, including submitting required documentation and/or payment, the employee takes follow-up action within ten (10) calendar days of the deadline, including closing the case if appropriate.

The ICS Advisory case file should reflect all actions taken and deadlines established. If documentation and/or payment are received after the ICS NFOI has been closed, create a new ICS NFOI to complete the investigation and make an appropriate recommendation.

When circumstances dictate, the employee should use problem solving and negotiation techniques, and in so doing consider the taxpayer's, POA's, or third party's perspective when working toward case resolution.

Certain expenses may be treated as reasonable and necessary expenses for the financial transaction and should be considered in calculating the amount of the government's interest. These expenses, which do not have to be present, may include, but are not limited to, the following items:

Allowance of the expenses listed in (1) is prohibited if any of the following conditions are present:

Attorney fees are allowable expenses if they are incurred as part of the subject transaction or application process and they are reasonable in amount. Attorney fees are not allowable for representation unrelated to the subject transaction (e.g., litigation against third party, representation on other tax matters). The amount of attorney fees is generally considered reasonable if it does not exceed the limitations established under IRC 7430(c)(1)(B)(iii).

In certain sale situations, the buyer and seller may agree to a slightly higher selling price in exchange for the seller paying additional closing costs. Normally, this is done to facilitate the loan process of the buyer but may also be used to enhance the marketability of the property. These seller (i.e., taxpayer) paid costs may be allowable as an expense if, among other factors, they:

If expenses are incurred (sometimes called "staging" expenses by realtors) and it is demonstrated that they either hastened the sale or increased the amount received at sale, then allow the expenses. In particular, if prevailing economic conditions are poor, and "staging" assists in selling a property, providing a taxpayer with an avenue to make payment on their taxes, allow these expenses so long as the expense is reasonable and ordinary in the state where the property was, or is being, sold.

Fees for auctioneering services are allowable if they are reasonable and necessary for the sale of the property. If a realtor employs the services of an auctioneer (or similar vendor) to facilitate a sale, the sum total of the realtor and auctioneer fees should not exceed the amount generally allowable for the realtor’s commission alone.

The determined interest of the United States necessary for issuance of a discharge or subordination should not be reduced in order to allow payment to an interest that is junior to the federal tax lien.

In certain discharge situations, when selling a principal residence, taxpayers are allowed limited funds from sale proceeds to pay relocation costs. Consider payment of these costs if the taxpayer demonstrates a need for this relief.

The relocation allowance is deducted from the government’s interest in the property. Junior lien holders are not impacted and have no entitlement to the funds.

Use the following criteria when considering the relocation expenses allowance:

All revenue officer reports of investigation will be promptly entered on Form 3033, Investigation of Request for Certificate of Discharge or Subordination. The application should be carefully examined to make certain that the property is adequately and properly described.

The revenue officer submits the report, together with the copy of the application and all exhibits, to Advisory Consolidated Receipts (ACR).

In the case of an application relating to a foreclosure proceeding, a complete investigation, including initial review and any necessary contact, shall result in a recommendation for acceptance/denial within fourteen (14) calendar days after receipt in the group of the application. In all other cases, recommendation should be made within thirty (30) calendar days unless more expeditious action may be necessary. Document any cause of delay in the ICS history.

Advisory either completes Form 3033 or summarizes the computation of the government’s interest in the ICS history, supported by documentation in the case file.

After a completed Form 3033 is received, Advisory has ten (10) calendar days to make the recommendation to accept or deny the application for a certificate.

Neither the Internal Revenue Code (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 Delegation Order 5-4 (IRM 1.2.2.6.4).

Lien-related certificates and their associated letters and forms may be signed by the approving official via electronic means or by authorized stamp 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.

Some recording offices may be reluctant 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 Processing Notice of Federal Tax Lien Documents, for more information.

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

Use the procedures in this section when:

Do not use the proceeds from the discharge (or subordination) as any part of the offer payment. The equity received from the property was applied to reduce the tax liability and it is not in the government's interest to apply the previously posted proceeds to an OIC. See IRM 5.8.1.15.3, Amount Offered.

If the offer amount relies on the equity from property that no longer exists because of a prior discharge, advise the taxpayer that the amount of the offer, and amount of the mandatory initial TIPRA payment, should be reduced to exclude the equity in the discharged property.

Use the procedures in this section when the taxpayer simultaneously:

TIPRA provides that the IRS must make decisions on OICs within two (2) years from the "received date." If the IRS does not make a decision on the OIC after two years, the OIC is automatically accepted. To ensure the government's interest is protected, Advisory and OIC managers ensure cases involving both OICs and discharges (or subordinations) are worked timely.

Date stamp the offer "received."

Within one (1) business day, prepare Form 657, Offer in Compromise/Revenue Officer Report. Write "Discharge/Subordination Request" in red ink at the top of the Form 657. This alerts COIC not to consider the OIC a "solely to delay collection" case.

Forward the Form 657 with a copy of the application for discharge (or subordination) and all offer documents (e.g., Form 656, Form 433, support documents, and payments, if applicable) to the appropriate COIC site via overnight mail. See additional guidance in IRM 5.8.1.14.1, Initial Receipts of Offers Received Elsewhere in the IRS, and IRM 5.8.10.6 , Discharge and Subordination Requests.

Review the discharge (or subordination) application within one week of receipt. If additional documentation or information is needed request it immediately.

Recommend acceptance or rejection of the discharge (or subordination) application following normal procedures.

If during the review of the discharge (or subordination), notification is received that the OIC is not processable or rejected, continue the review to completion. Contact the taxpayer to notify them that any proceeds from the discharge (or subordination) will be applied to the tax liability.

Use the procedures in this section when the taxpayer requests a discharge (or subordination) :

Upon initial review of the discharge (or subordination) application if it is determined the taxpayer has a pending OIC, contact the taxpayer to advise that any proceeds from the discharge (or subordination) will be applied as a payment toward their tax liability and credited toward the offer amount.

Contact COIC or the Offer employee assigned the case, if known, and inform them of the discharge (or subordination) request. Contact them again after the funds are applied and/or the investigation is complete so they may resume processing of the OIC.

Upon initial review of the discharge (or subordination) application if it is determined that an Offer in Compromise has been accepted but the offer amount has not yet been paid, contact the MOIC unit to find out the terms of the agreement.

Applications are generally referred directly to the Advisory Group for review.

Advisory should first evaluate if a non-attachment is necessary to resolve the issue (e.g., mailing address confusion, NFTL on former spouse with no property attachment implications). If it does not appear a non-attachment is needed, contact the applicant and attempt to resolve questions. If the applicant insists on a non-attachment, continue processing request.

Evaluate if there is any attachment of the lien to the applicant's property by considering applicable state and local laws on property ownership. Be alert to factors that indicate the taxpayer is exercising control or authority over the property even though no legal ownership is claimed.

Determine from the information furnished and from internal sources whether a certificate should be issued. Additional information may be requested from the applicant as needed by using Letter 5603 , Response to Certificate of Non-Attachment Request. An OI may be issued if a field investigation is required and Area Counsel may be asked for an opinion if necessary.

Advisory controls its work on the request on ICS under NFOI 149, Certificates of Non-Attachment.

Keep original or copies of all documents that relate to investigations of lien certificate applications. Specifically, keep the following in case files during investigation of applications and after investigations are complete:

Maintain documentation in an orderly manner so it may be consulted if further actions are necessary on the case.

Retain files as specified in Document 12990, Records Control Schedules.