Rev. Proc. 68-9

SECTION 1. PURPOSE.

Section 400.2-1(b) of the Temporary Regulations, T.D. 6944, page 854, this Bulletin, under the Federal Tax Lien Act of 1966, P.L. 89-719, C.B. 1966-2, 623, provides that any person desiring a certificate of discharge of property by substitution of proceeds of sale under section 6325(b)(3) of the Internal Revenue Code of 1954 shall submit an application in writing to the district director responsible for the collection of the tax, and the application shall contain such information as the district director may require. This Revenue Procedure contains the information which is required by a district director in an application for discharge of property by substitution of proceeds of sale.

SEC. 2. BACKGROUND.

Pursuant to section 400.2-1(b) of the regulations, a district director may, in his discretion, issue a certificate of discharge of the property subject to any lien imposed under chapter 64 of the Code if the property is sold and, pursuant to a written agreement with the district director, the proceeds of the sale are held, as a fund subject to the liens and claims of the United States, in the same manner and with the same priority as the liens and claims had with respect to the discharged property. In order for the provisions of section 400.2-1(b) of the regulations to apply, the sale must divest the taxpayer of all right, title, and interest in the property sought to be discharged.

SEC. 3. APPLICATION FOR CERTIFICATE OF DISCHARGE.

Any person desiring a certificate of discharge under section 400.2-1(b) of the regulations shall submit a written application, containing the information set forth in section 4 of this Revenue Procedure, in triplicate to the district director (marked for the attention of the chief, special procedures section) responsible for the collection of the tax, declaring that the application is made under penalties of perjury and requesting that the certificate be issued. At the request of the applicant, the district director may, in his discretion, approve an excrow agent selected by the applicant. Any reasonable and necessary expenses incurred in connection with the sale of the property and the administration of the sale proceeds shall be paid by the applicant or from the proceeds of the sale before satisfaction of any claims and liens.

SEC. 4. INFORMATION REQUIRED IN APPLICATION.

.01 The name and address of the applicant, the name and address of the taxpayer, and the family relationship, if any, of the applicant to the taxpayer.

.02 A detailed description, including location, of the property with respect to which the certificate is sought (in the case of real property, the street address, city, and State and the same description as is contained in the title or deed to the property).

.03 A statement describing the sale in which the taxpayer is or will be divested of his right, title, and interest in the property sought to be discharged.

.04 A copy of each Notice of Federal Tax Lien (Form 668) affecting the property, or the following information with respect to each such Notice of Federal Tax Lien:

(1) The internal revenue district named thereon,

(2) The name and address of the taxpayer, and

(3) The date and place of filing of the notice.

.05 A list of the encumbrances upon the property which are believed to be prior to the Federal tax lien showing in each case-

(1) The name and address of the holder of the encumbrance,

(2) A description of the encumbrance,

(3) The date of the agreement under which the encumbrance arose,

(4) If recorded, the date and place of recordation,

(5) The original principal amount of the encumbrance and the rate of interest,

(6) If known, the principal amount due as of the date of application (with costs and accrued interest separately stated), and

(7) The family relationship, if any, of the applicant to the holder of any other encumbrance on the property.

.06 An itemization of all proposed or actual costs, commissions, and expenses of the transfer or sale of the property.

.07 An estimate by the applicant of the fair market value of the property with respect to which the discharge is sought and the following information:

(1) In the case of a private sale, written appraisals of the fair market value of the property by two disinterested persons qualified to render appraisals of the property, with a brief statement setting forth each appraiser's qualifications,

(2) In the case of a public sale or auction already held, the date and place of the sale and the amount realized by the sale of the property, or

(3) In the case of a public sale or auction yet to be held, the date and place of the sale and a statement that the United States will be paid, in its proper priority, from the proceeds of the sale.

.08 Any other information which in the opinion of the applicant might have a bearing upon the determination to be made.

.09 An attached copy of the proposed agreement under which the sale proceeds are held and distributed, including, where relevant, the following information:

(1) Name and address of the holder of the sale proceeds,

(2) The name and address of the depository for the sale proceeds including the name and caption of the account,

(3) The conditions under which the sale proceeds are to be held and distributed, and

(4) The estimated costs of administering the sale proceeds.

.10 The name and address of the applicant's attorney or representative, if any.

.11 The signature of the applicant.

SEC. 5. ADDITIONAL INFORMATION.

In addition to the information required to be submitted under section 4 of the Revenue Procedure, after submission of the application the district director may require the applicant to furnish such additional information as the district director may deem necessary.

¹ Also released as Technical Information Release 962, dated Jan. 26, 1968.