Federal Tax Lien on the Seller: Payoff, Release and Discharge at a Florida Closing

Published October 9, 2026 · Recalde & Friedman, PLLC

How the lien arises

If a person liable for a federal tax neglects or refuses to pay after demand, the unpaid amount, with interest and penalties, becomes a lien in favor of the United States on all of that person's property and rights to property (26 U.S.C. § 6321). Against a purchaser, mortgage lender, mechanic's lienor or judgment creditor, the lien isn't valid until the IRS files a Notice of Federal Tax Lien (26 U.S.C. § 6323(a)).

In Florida, notices of federal liens on real property are filed with the clerk of the circuit court in the county where the property is located (§ 713.901, Fla. Stat.(3)). That's why a title search on a seller can turn up a federal tax lien, sometimes one the seller didn't know about.

Is it really the seller?

Common names produce false matches. If the lien might belong to someone else, the title agent will usually ask for identifying information to confirm it doesn't. Don't assume a match, and don't assume it's someone else's.

Option 1: pay it off and get a release

If the sale proceeds cover the liability:

• Get a payoff figure from the IRS. IRS Publication 1450 lists ways to request one, including through the Centralized Lien Operation.
• The IRS must issue a certificate of release within 30 days after the liability is fully paid or becomes legally unenforceable, or after it accepts a bond (26 U.S.C. § 6325(a)).
• Publication 1450 explains that payment with guaranteed funds, such as a certified or cashier's check, can support immediate issuance of the release when there's an urgent need. With other payment forms, the certificate issues within 30 days.

Closing agents typically pay the lien from the seller's proceeds and track the recorded release afterward. Ask your closing agent how the title insurer wants it handled.

Option 2: a certificate of discharge

If the seller owes more than the property will net, or the liability is disputed, a full payoff may not be possible. A certificate of discharge under 26 U.S.C. § 6325(b) removes the lien from a specific property while the tax debt remains. The IRS may issue one in situations including:

• the property still subject to the lien is worth at least double the unpaid liability plus senior liens ((b)(1));
• the IRS is paid an amount it determines is equal to the government's interest in the property being discharged ((b)(2)(A)); or
• the government's interest in the property has no value, for example because senior mortgages exceed the sale price ((b)(2)(B)).

Applications are made on Form 14135. IRS Publication 783 asks that the application be submitted at least 45 days before the transaction date the certificate is needed. A pending discharge application is a reason to set a realistic closing date or to extend the cure period. See when the seller can't cure title.

Estate tax liens are different

When property comes from a larger decedent's estate, a federal estate tax lien can also be an issue. Discharge of estate tax liens is handled under a different subsection and form. Publication 783 doesn't cover it and refers estate tax lien discharges to Form 4422. If the seller inherited the property, raise it with the probate attorney early. See selling after an owner dies.

Timeline tips

• Order title early. A lien found two days before closing leaves little room.
• Sellers who know about a tax debt should tell their agent and closing agent at listing.
• Under the FR/BAR contract, a lien that must be removed is a title defect subject to the Standard A cure process. The seller's 30-day Cure Period can be extended by the buyer up to 120 days.
• Short sales: when proceeds won't cover all liens, the IRS, the mortgage lender and the buyer's timeline all need to line up. Get advice early.

Hypothetical

A title search shows a recorded Notice of Federal Tax Lien against the seller from several years ago. The seller believes it was paid. The closing agent asks for proof of payment and checks for a recorded certificate of release. None was recorded. The seller requests a release under Publication 1450, providing a copy of the lien notice and proof of payment, and the closing is scheduled with enough time for the release to arrive. If the lien had not been paid, the seller would instead have needed a payoff, or a discharge application filed well ahead of closing.

Frequently asked questions