IRS Form 668-Z Partial Release of Lien

The IRS uses Form 668-Z to notify you of the partial release of a lien filed. This can be very difficult to accomplish and requires filing Form 13794.

Although there is no provision in the IRC for the issuance of a partial release, circumstances sometimes dictate that a partial release of the NFTL is necessary under the following circumstances.

When one person named on an NFTL as a co-obligor for a tax liability is relieved of or satisfies their liability, a certificate of release for that taxpayer must be issued. If there remains a balance on the liability for which the other co-obligor is still liable, a partial release must be issued. Most commonly, a partial release is issued when:

There is a discharge in bankruptcy, and only one person of the joint liability petitioned the court;

One person requests an offer-in-compromise of the joint liability, and the offered amount is accepted; or

There is an innocent spouse determination.

A partial lien release may also be generated when there are multiple tax liabilities on the NFTL and the taxpayer requests a release for a specific tax liability that has been satisfied. Absent a taxpayer request; standard practice is not to issue a certificate of release until all liabilities on the NFTL are satisfied.

Unless the conditions of erroneous NFTL filing are met, partial releases should not be issued when the IRS mistakenly includes the name of a non-liable person on the NFTL. An amended NFTL should be filed to remove the non-liable person's name in these situations.

Partial lien releases should be prepared using ALS. The generated release document identifies the name of the non-liable taxpayer and includes wording in the document's body to determine the partial release situation.

The IRS uses Form 668-Z to notify you of the partial release of a lien filed. This can be a very difficult to accomplish and requires the filing of a Form 13794.

Form 668-Z Partial Release of Lien

The IRS uses Form 668-Z to notify you of the partial release of a lien filed. This can be very difficult to accomplish and requires filing Form 13794.

Although there is no provision in the IRC for the issuance of a partial release, circumstances sometimes dictate that a partial release of the NFTL is necessary under the following circumstances.

When one person named on an NFTL as a co-obligor for a tax liability is relieved of or satisfies their liability, a certificate of release for that taxpayer must be issued. If there remains a balance on the liability for which the other co-obligor is still liable, a partial release must be issued. Most commonly, a partial release is issued when:

There is a discharge in bankruptcy, and only one person of the joint liability petitioned the court;

One person requests an offer-in-compromise of the joint liability, and the offered amount is accepted; or

There is an innocent spouse determination.

A partial lien release may also be generated when there are multiple tax liabilities on the NFTL and the taxpayer requests a release for a specific tax liability that has been satisfied. Absent a taxpayer request; standard practice is not to issue a certificate of release until all liabilities on the NFTL are satisfied.

Unless the conditions of erroneous NFTL filing are met, partial releases should not be issued when the IRS mistakenly includes the name of a non-liable person on the NFTL. An amended NFTL should be filed to remove the non-liable person's name in these situations.

Partial lien releases should be prepared using ALS. The generated release document identifies the name of the non-liable taxpayer and includes wording in the document's body to determine the partial release situation.

What is my first step?

If you received a letter or notice, a decision has to be made. Do you feel confident to handle this situation on your own? If it is a simple issue and you already know the answer, call or write them. If the problem is more complicated, you need to hire a Certified Tax Resolution Specialist. The IRS or State will take full advantage of your lack of knowledge and experience.

What is Your Next Step?

The next step is to determine if the notice was sent in error. Do you have an outstanding tax liability? Do you have unfiled or incomplete returns?

Is There a Time Limit?

Yes, each letter or notice from the IRS or State will indicate a date you MUST contact them. If you need more time, call the number on the notice or letter and request an extension. Please DO NOT ALLOW the time to expire without contacting them or hiring a representative to contact them for you.

What You Don’t Want to Do!

What you don’t want to do is nothing. Your tax problems will only get worse if you ignore them. If you cannot pay, there are several potential solutions available to those otherwise in compliance. In compliance means having all tax returns filed and any balances paid or on a payment plan. If you have outstanding debts or unfiled returns, you need to hire a Certified Tax Resolution Specialist.

Get Some Help

If you don’t know how to address the issue(s), have unfiled return/unpaid balances, or just done feel confident, let the experts at Legacy Tax & Resolution Services represent you. Work with our team of Certified Tax Resolution Specialists to resolve your issue(s) quickly. Best of all, you don’t have to talk to the IRS or State; we can speak on your behalf.