Comments on Proposed Changes to IRS Form 4422, Application for Certificate Discharging Property Subject to Estate Tax Lien

SUMMARY

The Estate and Gift Taxation Committee (Evelyn M. Capassakis, Chair) issued comments on proposed changes to IRS Form 4422, an application for certificate discharging property subject to an estate tax lien.  As a result of recent changes, many estates are now required to pay the proceeds of sale directly to the IRS or to hold the proceeds of sale in escrow until the IRS determines that the estate has satisfied its federal estate tax liability in full.  Part I of the report discusses the Committee’s concern that the application does not request certain information, such as the estimated tax liability, which may assist the IRS Advisory Estate Tax Lien Group in quickly and efficiently determining whether it is necessary to restrict access to the sales proceeds of the subject property. Part II sets forth the Committee’s concerns as to certain changes to the instructions to the application. The Committee addresses timing as it relates to IRS processing times and the conditional nature of the Release of Lien that is issued.  The Committee also questions the necessity of providing the IRS with a valuation of the property in the case of a third-party sale where the contract of sale is already included with the application. Finally, the Committee address the effect of having applications now processed by the Advisory Estate Tax Lien Group as it relates to a newly imposed escrow requirement.