Internal Revenue Code section 6324 provides that on the day someone dies a federal estate tax lien comes into existence. The lien attaches to all assets of the decedent’s gross estate that are typically reported on Form 706, United States Estate Tax Return. This estate tax lien does not have to be publically recorded in order to be valid. An “assessment lien” under IRC § 6321 arises when tax is assessed and may be recorded in addition to the lien provided by IRC § 6324.
What does the above mean? Put simply as possible, it means that before you sell real property of a decedent’s estate you typically need the IRS to “discharge” that property from either the estate or the assessment tax lien. To discharge property from a lien is to remove the lien’s effect. This allows the buyer to take title to the property free and clear of the tax lien.
For help with requesting a discharge involving a decedent’s income tax liability, see IRS Publication 783, Instructions on How to Apply for a Certificate of Discharge from Federal Tax Lien. Publication 783 will help you to prepare your discharge application and tell you what supporting documentation you will need to provide. In addition to the supporting documents listed in Publication 783, you will be asked to provide:
- The inventory and appraisement of the estate assets
- A copy of the will
- Copies of documents related to the sale of property
For help with requesting a discharge involving any estate or gift tax liabilities, submit your discharge application using IRS Form 4422, Application for Certificate Discharging Property Subject to Estate Tax Lien to the IRS’s Advisory Estate Tax Lien Group for processing. The instructions attached to Form 4422 include a list of required documentation to send with your application and where to send it. Please be sure to include your contact information and authorization to represent the estate with the application in case we need to discuss it with you.
Submit your application at least 45 days before the transaction date that the certificate of discharge is needed. Doing so will allow sufficient time for review, determination, notification and furnishing of any applicable documents by the transaction date. Applications will be processed in accordance with discharge provisions in IRC § 6325(c), Treasury Regulation 301.6325-1(c) and IRM 5.12.10, Lien Related Certificates.
Guidance for IRS staff on responsibility to process all requests for discharge of estate tax lien (PDF) is available in the IRS.gov FOIA reading room, Part 5 – Collecting Process.