Publication 786 INSTRUCTIONS FOR PREPARING A NOTICE OF NONJUDICIAL SALE OF PROPERTY AND APPLICATION FOR CONSENT TO SALE
Publication 786
- Jurisdictions
- LanguageEnglish
What's New
1. Revised Notice of Sale Requirements to clarify that personal service includes delivery by private delivery service.
FAQs
What is a Federal Tax Lien and a Notice of Federal Tax Lien
A federal tax lien is the government's legal claim against property when there has been a neglect or refusal to pay a tax debt. The Notice of Federal Tax Lien is a public document filed to alert creditors of the lien's existence and to secure the government's claim to property subject to the lien. For more information see http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Understanding-a-Federal-Tax-Lien
What is a Notice of Sale and why is it required? A notice of sale informs the IRS of a foreclosure sale when the IRS is a secured creditor. In order for property described in Internal Revenue Code (IRC) § 7425(b) to be sold at a nonjudicial sale free and clear of liens or title of the United States, a notice of the sale must be provided in accordance with IRC § 7425(c) or consent for the property to be sold free of the liens or title of the United States must be obtained in accordance with IRC § 7425(c). An effective Notice of Sale discharges or removes any junior lien or claim the United States has in the property through the sale. It will not remove a lien or claim which is senior to the foreclosing party's interest.
How do I know if there is an IRS lien interest? In general, for nonjudicial foreclosure sale purposes, the United States has a lien or claim against the property being foreclosed when a Notice of Federal Tax Lien attaching the property has been filed more than 30 days prior to the sale.
Are there consequences for not providing a Notice of Sale? If the United States has a junior lien or claim against the property being sold and a Notice of Sale is not provided to the IRS as required, then the sale does not disturb the lien and it remains attaching to the property. After the sale, the foreclosure sale purchaser would need to apply for a Certificate of Discharge of Property From Federal Tax Lien. See Publication 783, Application Form 14135, and the video Selling or Refinancing when there is an IRS Lien.
What is included in a Notice of Sale? A Notice of Sale must contain the information identified as required in the Notice of Sale Instructions section. The Notice is considered inadequate if it does not include all the required information. The IRS notifies the party identified as submitting the Notice of Sale not less than five days before the foreclosure sale of the inadequacy. Letter 1840, Notice of Inadequacy, is used for this purpose. Unless an adequate Notice of Sale is provided at least 25 days before the sale, the Notice of Sale will not be effective to discharge or remove the lien or title of the United States.
What happens if the Notice of Sale is not effective? The liens or claims of the United States are not discharged. Consent to Sale of Property Free of the Lien may be applied for prior to the sale. This consent is the IRS' agreement allowing the foreclosure sale to discharge the property of the liens or claims of the United States where the Notice of Sale will not be effective.
Where to Submit a Notice of Sale or Application for Consent
Collection Advisory Group Manager (for the geographical area where the Notice of Federal Tax Lien was filed. Use Publication 4235, Collection Advisory Group Addresses, to find the Collection Advisory office where you would submit your documents.)
Submission is in writing, by United States Postal Service (USPS) registered or certified mail or by personal service. For purposes of Internal Revenue Code (IRC) §7425, "personal service" may be accomplished by the use of personal delivery services (PDS) such as Federal Express and United Parcel Service. With a PDS, the date of submission is the date of actual delivery, not the date the notice is given to the delivery service. For USPS registered or certified mail, the date of submission is the mailing date.
For Your Convenience
• Form 14497, Nonjudicial Notice of Sale is included as assistance in providing the Notice of Sale.
• Form 14498, Application for Consent to Sale of Property Free of the Federal Tax Lien is included as assistance in providing an application for Consent.
Notice of Sale Requirements
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1. Submit in writing;
2. Send by USPS registered or certified mail or by personal service.
(For purposes of IRC § 7425, "personal service" may be accomplished
by the use of PDS such as Federal Express and United Parcel
Service. With a PDS, the date of submission is the actual delivery
date, not the date the notice is given to the delivery service. For
USPS registered or certified mail, the submission date is the
mailing date.);
3. Send to the Internal Revenue Service (IRS) official, office and
address specified in Where to Submit a Notice of Sale or
Application for Consent;
4. Provide the required information in the Notice of Sale Instructions
(*items marked optional are not required) and
Additional Requirements Additional Requirements
Non-Perishable Property Perishable Property
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5. Send at least 25 days before the 5. Send at any time before the
sale or date of termination of the sale;
contract for deed. The 25 day
period commences upon receipt of 6. Provide the reasons the
an adequate notice of nonjudicial property is liable to perish
sale. The date of receipt for or become greatly reduced in
notices sent by certified or value if kept a minimum of
registered mail is determined by 25 days, or reasons it
the U.S. Postal Service postmark cannot be kept for that
date. period of time without
incurring great expense;
WARNING: A Notice of Sale not
received in the manner described in 7. Hold the proceeds (exclusive
this section, will not be effective of costs) of the sale as a
to remove the federal tax lien from fund, for not less than 30
the property or extinguish any title days after the date of the
held by the United States, without sale, subject to the liens
the express consent of the United and claims of the United
States. (See Consent to Sale of States, in the same manner
Property Free of the Lien). and with the same priority
as the liens and claims of
POSTPONEMENTS: Where a sale is the United States had with
postponed, if a Notice of Sale was respect to the property
required and provided, notify the IRS prior to sale.
in the same way that local law
requires other secured creditors to WARNING: The seller becomes
be notified. Where a Notice of Sale personally liable for the
was not required for the original amount of the liens and claims
sale, but the new sale date is more of the United States if they do
than 30 days after the postponement not hold these funds for the
and a notice of lien was filed at IRS.
least 30 days before the rescheduled
sale, a notice of sale must be DEFINITION OF PERISHABLE
provided following the directions in
this publication. Any tangible personal property
which, in the reasonable view
ACKNOWLEDGEMENT of the person selling the
property, is liable to perish
Only the original of a Notice of Sale or become greatly reduced in
is required. If acknowledgement of price or value by keeping, or
receipt is desired, include a cannot be kept without great
duplicate copy of the original Notice expense.
of Sale along with a written request
for acknowledgement. An
acknowledgement will be provided
indicating the date and time of
receipt.
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Application for Consent
1. Submit in writing;
2. Made with a declaration under penalties of perjury that the information is true, correct, and complete; and
3. Send to the Internal Revenue Service (IRS) official, office and address specified in Where to Submit a Notice of Sale or application for Consent
WARNING: The IRS cannot consent after the date of the sale.
Provide the required Information in the Application for Consent Instructions Provide the required Information in the Notice of Sale Instructions (*items marked optional are not required, and
Provide Adequate Protection.
ADEQUATE PROTECTION of the government's claims must be provided. Protection is considered adequate if:
• The taxpayer has no equity in the property, or
• The taxpayer's interest in the property being sold has been assigned to the IRS, C/O the Collection Advisory Group Manager, or
• Any proceeds in excess of prior encumbrances have been assigned to the IRS, C/O the Collection Advisory Group Manager, or
• The sale divests the taxpayer of all rights, title and interest in the property, and the proceeds are to be held as a fund subject to the liens and claims of the United States in the same manner and priority as the liens and claims were held on the discharged property, or
• There are other known circumstances acceptable to the Collection Advisory Group Manager.
General Information
Notice of Sale: What Is It and Why Is it Required
A Notice of Sale is a document or documents used by the foreclosing party to inform the Internal Revenue Service (IRS) of a nonjudicial foreclosure sale. It allows the IRS to identify what, if any, interest the United States has in the property being sold. In the case of real property, it allows the IRS to begin considering whether to exercise its redemption rights after the sale. More information can be found on http://www.irs.gov about federal tax liens.
A Notice of Sale is required when the IRS has a lien or claim on the property to be sold which is junior to the foreclosing party's claim. When properly noticed, an IRS junior interest is discharged from the property through the foreclosure sale.
Redemption
When real property is sold, the United States retains the right to redeem the property from the foreclosure sale purchaser. If the IRS redeems the property for the United States, it will resell the property for the purpose of obtaining money which can be applied to the taxpayer's tax lien debt.
Consent to Sale of Property Free of the Lien
Consent to Sale of Property Free of the Lien is the IRS' agreement allowing the foreclosure sale to discharge the property of the liens or claims of the United States.
When the foreclosure sale will not be effective to discharge the property being sold from the liens or claims of the United States, the IRS may consent to the sale of the property free of the liens. Consent can only be provided by the Collection Advisory Group Manager for the IRS office where the sale is to take place.
Certain information is required by regulation to be included in the Notice of Sale or Consent Application. Items marked optional are not required. The instructions will indicate if it is required or optional information. The forms themselves are not required.
Notice of Sale Instructions
(Form 14497, Notice of Nonjudicial Sale of Property)
Required
1. Name and address and telephone number of the person submitting the notice (please include a fax number);
OPTIONAL (Additional Names and Addresses):
• The certified mail control number
• The Foreclosing Instrument's file number
• The Foreclosing Instrument's recording date.
• A copy of each Form 668(Y)(c), Notice of Federal Tax Lien, effecting the property to be sold -OR- from the recorded Notice of Federal Tax Lien, you may provide the following information:
• The name of the IRS Area (District) office or the place where the notice was prepared and signed;
• The name and address of the taxpayer; and
• The date and place where the notice of lien was filed.
• If known, the redacted secondary social security number of any spouse whose name is listed on the Notice of Federal Tax Lien
• If the applicable Notice of Federal Tax Lien is not being included in the Notice of Sale, list the System Lien Identification Number (SLID) found in the top right hand box of the lien notice document, if available.
• A detailed description, including location, of the property to be sold that is affected by this Notice of Sale.
• For real property, give the complete physical address; the legal description contained in the title or deed of the property; if available, a copy of the abstract of title,
• For personal property, include serial or vehicle numbers, as appropriate, (e. g. 2002 Cessna twin engine airplane, serial number AT919000000000X00)
• For perishable property, provide the reasons the property is liable to perish or become greatly reduced in value if kept a minimum of 25 days, or reasons it cannot be kept for that period of time without incurring great expense.
• The date, time, place, and terms of the sale of the property OR the date the taxpayer's interest in the property is terminated; and
Required
• The approximate amount of principal obligation including interest due the person selling the property and a complete description of any expenses. This may include legal expenses, selling costs, maintenance fees and expenses, which will be charged against the sale proceeds. NOTE: not all expenses may be reimbursable if there is an IRS redemption of the property.
OPTIONAL: (Property Value Details):
• Estimated amount of any anticipated foreclosure sale surplus or excess.
Check the box, if an acknowledgment of the Notice of Sale is being requested.
(Form 14498, Application for Consent to Sale of Property Free of the Federal Tax Lien)
Required
• Provide applicant name, address, and telephone number (please include a fax number);
OPTIONAL (Additional Names and Addresses):
• The certified mail control number
• The Foreclosing Instrument's file number
• The Foreclosing Instrument's recording date.
• A copy of each Form 668(Y)(c), Notice of Federal Tax Lien, effecting the property to be sold -OR- from the recorded Federal tax lien, you may provide the following information:
• The name of the IRS Area (District) office or the place where the notice was prepared and signed;
• The name and address of the taxpayer; and
• The date and place where the notice of lien was filed.
• If known, the redacted secondary social security number of any spouse whose name is listed on the Notice of Federal Tax Lien
• If the applicable Notice of Federal Tax Lien is not being included in the Notice of Sale, list the System Lien Identification Number (SLID) found in the top right hand box of the lien notice document, if available.
• A detailed description, including location, of the property to be sold that is affected by this Notice of Sale.
• For real property, give the complete physical address; the legal description contained in the title or deed of the property; if available, a copy of the abstract of title,
• For personal property, include serial or vehicle numbers, as appropriate, (e.g. 2002 Cessna twin engine airplane, serial number AT919000000000X00),
• For perishable property, provide the reasons the property is liable to perish or become greatly reduced in value if kept a minimum of 25 days, or reasons it cannot be kept for that period of time without incurring great expense.
• The date, time, place, and terms of the sale of the property -OR- the date the taxpayer's interest in the property terminated.
REQUIRED
• The approximate amount of principal obligation including interest due the person selling the property and a complete description of any expenses. This may include legal expenses, selling costs, maintenance fees and expenses, which will be charged against the sale proceeds. NOTE: not all expenses may be reimbursable if there is an IRS redemption of the property.
OPTIONAL (Additional Property Value and Creditor Details):
• Amount due lien holders superior to the Federal Tax Lien, if known. List any encumbrances (liens or claims) against the property that came into existence before the United States' lien interest or which have priority over the lien, if known. Include name and address of holder: description of encumbrance, e.g. mortgage, state lien, etc.; date of agreement; original amount and interest rate; current amount due; and family relationship of the holder, if applicable.
• Estimated amount of any anticipated foreclosure sale surplus or excess proceeds.
Check the box, if an acknowledgment of the Consent Application is being requested.
REQUIRED
• Provide the basis for requesting the consent;
REQUIRED
• Include a statement indicating what adequate protection is being afforded to the United States lien or title;
REQUIRED
• Attach any documents needed to substantiate the application; and
REQUIRED
• Include the following declaration over your signature and title. "Under the penalties of perjury, I declare that I have examined this application (including any accompanying schedules, exhibits, affidavits, and statements) and to the best of my knowledge and belief it is true, correct, and complete."
Internet Sales
A Notice of Sale should be given to the Collection Advisory Group Manager in the IRS office where the property is located, when the sale is conducted over the Internet.
NOTE: All other provisions referred to in this publication apply.
Privacy and Paperwork Reduction Act Notice
We ask for the information on these forms to carry out the Internal Revenue laws of the United States. The information is used to process your Notice of Sale or Application for Consent. You are not required to notify us of a non-judicial sale, or to apply for consent to the sale; however, if you want a federal tax lien to be discharged by the sale, IRC § 7425 requires you to provide certain information, as indicated. Section 6109 requires you to provide the requested identification numbers. Failure to provide this information may delay or prevent processing your Notice or Application; providing false or fraudulent information may prevent discharge of the lien and may subject you to penalties.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as stated in section 6103. However, section 6103 authorizes us to disclose the information pursuant to the Code. We may disclose this information to the Department of Justice for civil and criminal litigation, and to cities, states, the District of Columbia, and U.S. commonwealths and possessions for use in administering their tax laws. We may contact you, your representative, or any person to obtain additional information about the transaction. We may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for individuals filing this form is approved under OMB control number 1545-0854. The estimated burden for those who file this form is shown below.
• Recordkeeping 2 hr., 45 min.
• Learning about the law or the form 2 hr.
• Preparing the form 1 hr., 30 min.
• Copying, assembling, and sending the form to the IRS 85 min.
2015 Form 14497, Notice of Nonjudicial Sale of Property
2015 Form 14498, Application for Consent to Sale of Property Free of the Federal Tax Lien] !EN
- Jurisdictions
- LanguageEnglish
