You have a buyer. The title search turns up a federal tax lien. The closing date is three weeks away and the title company will not proceed.

This situation resolves more often than people expect. The tool is Form 14135, and the IRS grants these routinely when the numbers work.

What a discharge does

A federal tax lien attaches to everything you own. A discharge removes it from one specific piece of property so a sale can close.

IRM 5.12.10 covers lien-related certificates, including discharge. The lien survives against your other property. It simply stops blocking this transaction.

Form 14135 carries the title Application for Certificate of Discharge of Property from Federal Tax Lien.

When the IRS grants one

Several grounds exist, and three cover most real transactions.

The IRS gets paid from the sale. Proceeds above the mortgage and closing costs go to the IRS. Straightforward, and the most common route.

The property has no equity for the IRS. Where the mortgage and senior liens exceed the sale price, the government collects nothing anyway. Discharging costs the IRS nothing and lets the sale proceed.

You pay the IRS the value of its interest. You calculate what the lien is worth against that property and pay that amount.

Discharge, subordination, withdrawal

Three remedies, three different problems. People apply for the wrong one constantly.

• Discharge removes the lien from one property. Use it to sell.
• Subordination keeps the lien but moves another lender ahead of the IRS. Use it to refinance. Form 14134 applies.
• Withdrawal removes the public notice entirely. Use it to fix the record. Form 12277 applies, under IRM 5.12.9.

Someone refinancing does not need a discharge. Someone selling does not need subordination. Filing the wrong application costs weeks you may not have.

Why subordination works for a refinance

A lender will not fund a mortgage that sits behind a federal tax lien. Their security depends on being first in line.

Subordination fixes that without removing the lien. The IRS agrees to sit behind the new lender.

The IRS agrees when the refinance helps it get paid. A lower interest rate that frees up monthly cash flow, or cash out that goes toward the tax balance, both make that argument.

Start early

This is the practical failure point. People apply too late.

The IRS needs time to process these applications, and a rushed request does not move faster. A closing three weeks out puts real pressure on the timeline.

Apply as soon as you list the property or start the refinance. Do not wait for a signed contract.

What the application needs

Incomplete applications cause most delays. Gather these before you file.

• A copy of the lien notice, Form 668(Y).
• The property’s legal description and address.
• A current appraisal or a professional valuation.
• Payoff figures for the mortgage and any other lien on the property.
• The purchase contract or the loan estimate.
• A preliminary closing statement showing where every dollar goes.

That last item matters most. The IRS wants to see the math, not a summary.

The equity argument

Where a sale produces nothing for the IRS, say so directly and show the arithmetic.

Sale price, minus the mortgage payoff, minus commissions and closing costs. If that leaves nothing, the government loses nothing by discharging.

IRM 5.12.10 governs these certificates, and the analysis mirrors the equity work in a seizure decision. The IRS applies the same logic: what would this property actually produce?

It does not clear your balance

A discharge frees one property. The debt remains, and the lien still attaches to everything else you own.

So a discharge solves a transaction problem. It is not a resolution, and anyone selling a property should plan for what happens to the balance afterward.

Where sale proceeds pay the IRS in full, that ends it. Where they do not, you still need an agreement on what remains.

How PFGTAX handles these

We check transcripts first to confirm which periods the lien covers and whether the balances still stand. Liens sometimes cover periods already satisfied, which changes the application.

Then we match the remedy to the transaction. Selling means discharge. Refinancing means subordination. Rebuilding credit after resolution means withdrawal.

PFGTAX has a lien subordination brief in its case files covering exactly this ground, and the pattern repeats: the application succeeds when the numbers get presented clearly and early.

What to have ready

Bring the lien notice, the property address, and your mortgage payoff figure. Have the purchase contract or loan estimate if one exists.

Then note your closing date. That single fact determines whether the timeline works.

Frequently asked questions

Can I sell a house with an IRS lien on it?

Usually yes, through a discharge. Form 14135 is the Application for Certificate of Discharge of Property from Federal Tax Lien, and IRM 5.12.10 covers these certificates. The lien comes off that one property so the sale can close, while remaining against your other property. Call PFGTAX at 888.572.2179.

What if the sale produces nothing for the IRS?

That is one of the standard grounds for a discharge. Where the mortgage and closing costs exceed the sale price, the government collects nothing anyway, so discharging costs it nothing. Show the arithmetic plainly: sale price minus payoff minus commissions and costs. Call 888.572.2179.

I need to refinance, not sell. Is discharge the right application?

No. Refinancing needs a subordination on Form 14134, which keeps the lien in place but lets the new lender move ahead of the IRS. Lenders will not fund behind a federal tax lien. Filing the wrong application costs weeks you may not have. Call PFGTAX at 888.572.2179.

How early should I apply?

As soon as you list the property or start the refinance. Do not wait for a signed contract. The IRS needs processing time and a rushed request does not move faster. Applying late is the most common reason these fail. Call 888.572.2179.

Does a discharge wipe out my tax debt?

No. It frees one property so a transaction can close. The balance remains and the lien still attaches to everything else you own. Where sale proceeds pay the IRS in full, that ends it. Where they do not, you still need an agreement on the remainder. Call PFGTAX at 888.572.2179.

This article is for general information only. It isn’t legal, accounting, or tax advice, and reading it doesn’t create a client relationship with PFGTAX. Every tax situation is different, and outcomes depend on your specific facts and eligibility. Talk with a licensed tax professional about your specific circumstances before acting on anything here.