How to Get an IRS Tax Clearance Certificate

An IRS tax clearance certificate is not a single document. The phrase refers to whichever official IRS confirmation applies to your transaction: closing out a business account after dissolution, discharging a federal estate tax lien from a specific piece of property, or obtaining a FIRPTA withholding certificate when a foreign person sells U.S. real estate. Each path uses its own form and supporting documentation, and each has its own timeline. Picking the wrong one, or starting too late, is what stalls closings and dissolutions.

Which Situation Applies to You

Three scenarios cover almost every request for IRS clearance.

You are closing a business. Many states will not grant final dissolution until the business shows federal tax compliance, and the IRS will not close a business account until every required return is filed and every tax paid.¹

You are selling property from an estate. When a decedent’s gross estate is large enough to require Form 706, a federal lien automatically attaches to every asset. That lien has to be formally discharged before affected property can transfer with clean title.²

You are a foreign person selling U.S. real property, or the buyer in that transaction. FIRPTA generally requires the buyer to withhold 15 percent of the gross sale price and send it to the IRS. A withholding certificate lets the seller reduce or eliminate that withholding when the actual tax liability is lower.³

Closing a Business With the IRS

Closing a business account is a sequence, not a single filing. Miss a step and the account stays open.

File Form 966 Within 30 Days of the Dissolution Resolution

A corporation that adopts a resolution or plan to dissolve must file Form 966, Corporate Dissolution or Liquidation, within 30 days of adopting that resolution.⁴ It goes to the service center where the corporation files its income tax return, with a certified copy of the resolution or plan attached. Not filing Form 966 doesn’t undo the dissolution, but it can trigger penalties for willful failure to file a required return.

File Final Income Tax Returns

The corporation files a final income tax return for the year it closes. C corporations use Form 1120; S corporations use Form 1120-S. Check the “final return” box near the top of the form.¹ Partnerships file Form 1065 and check the “final return” and “final K-1” boxes on Schedule K-1. Normal due dates apply. The return should account for asset dispositions and distributions to owners; sales of business property and going-concern sales bring additional forms into the return.

File Final Payroll Tax Returns

If the business had employees, file a final Form 941 for the last quarter wages were paid. Check the box on line 17 marking it as the final return and enter the last date wages were paid. Attach a statement with the name and address of whoever will keep the payroll records.⁵ The filing deadline is the last day of the month following the end of the quarter, with an extra 10 calendar days if all deposits were timely throughout the quarter.⁶

Send a Letter to Cancel the EIN

Once every return is filed and every tax paid, send the IRS a letter asking to close the business account and cancel the Employer Identification Number. Include the full legal business name, the EIN, the business address, and the reason for closing. If you still have the original EIN assignment notice, include a copy. Mail it to Internal Revenue Service, Cincinnati, OH 45999.¹ The IRS will not close the account while any return is outstanding or any balance is unpaid.

Discharging an Estate Tax Lien on Property

The federal estate tax lien attaches automatically to every asset in the gross estate of a decedent whose estate exceeds the filing threshold. For 2026, that threshold is $15,000,000 per individual.⁷ The lien isn’t recorded publicly, but it is enforceable, and title companies will find it. To sell or transfer a specific asset before the whole estate tax situation is resolved, apply for a discharge using Form 4422, Application for Certificate Discharging Property Subject to Estate Tax Lien.²

What to Attach to Form 4422

The form calls for the following supporting items, as applicable:⁸

Letters testamentary showing the executor’s authority
Legal description of the property, with a copy of the deed
Copy of the will
Sales contract or proposed sales contract
Closing statement or proposed closing statement
Current title report
Appraisal or other basis for the property’s value
Form 706 with applicable schedules if filed; a draft if not yet filed; or, at minimum, a list of the decedent’s assets with date-of-death values

Submit the application at least 45 days before the transaction date.⁸ Mail or fax it to Internal Revenue Service, Advisory Consolidated Receipts, 7940 Kentucky Drive, Mail Stop 2850A, Florence, KY 41042-2915. The e-fax number is 844-201-8382.

Escrow and Prepayment

If the estate tax return hasn’t been filed, or the IRS hasn’t finished reviewing it, the IRS decides case by case whether sale proceeds must be prepaid toward the tax or held in escrow until the final liability is determined.⁸ This is where property sales stall. Filing Form 706, or having a credible draft ready before submitting Form 4422, speeds things considerably.

Estates Below the Filing Threshold

An estate that falls below the $15,000,000 threshold and owes no estate tax can still request a letter from the IRS confirming no lien exists. Submit Form 4422 with the letters testamentary, a list of the decedent’s assets with date-of-death values, and a copy of the sales contract.⁸ Title companies sometimes insist on this letter even when no lien technically exists, so request it proactively if a sale is coming.

FIRPTA Withholding Certificates for Foreign Sellers

The standard FIRPTA withholding is 15 percent of the amount realized on the sale.⁹ Two exceptions apply when the buyer will use the property as a residence:

The residence exception requires the buyer to have concrete plans to live in the property for at least 50 percent of the days it is in use during each of the first two years after purchase, with vacant days excluded from the calculation.³

Applying With Form 8288-B

When the seller’s actual tax liability on the sale is lower than the standard withholding, apply for a reduced or zero withholding certificate on Form 8288-B. The application must include a U.S. Taxpayer Identification Number for every party to the transaction. A seller without one can apply for an Individual Taxpayer Identification Number by attaching Form W-7 to the package.¹⁰

Include a calculation of the seller’s maximum tax liability on the sale, backed by evidence of the amount realized (usually the signed contract), the property’s adjusted basis, any depreciation recapture, and the applicable tax rates. The seller signs the calculation under penalties of perjury.¹¹

Mail the completed Form 8288-B to Internal Revenue Service, P.O. Box 409101, Ogden, UT 84409. An incomplete application will be rejected, so every line and every attachment needs to be in place before mailing.¹¹ The IRS generally takes up to 90 days to process a complete application, and any closing that depends on the certificate needs to build that lead time in.

Lead Times and Common Mistakes

None of these processes is fast. Business account closings can take several months once the IRS starts reviewing the final returns and Form 966. Estate tax lien discharges require at least 45 days, more if the IRS asks for additional documentation or the estate tax return is still under review. FIRPTA withholding certificates take up to 90 days.

Starting late is the mistake that shows up in every scenario. If you are dissolving a business, file the final returns and Form 966 as soon as the resolution is adopted. If you are selling estate property, submit Form 4422 the moment you have a signed contract, ideally with Form 706 already filed or substantially drafted. If you are a foreign seller, get Form 8288-B in the mail months before the expected closing, not weeks. Starting early costs nothing; starting late costs a delayed transaction, frozen proceeds, or withholding that takes more than a year to recover through a tax return.

1
Internal Revenue Service. Closing a Business
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Internal Revenue Service. Sell Real Property of a Deceased Person’s Estate
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Internal Revenue Service. FIRPTA Withholding
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eCFR. 26 CFR 1.6043-1 – Return Regarding Corporate Dissolution or Liquidation
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Internal Revenue Service. Instructions for Form 941 (03/2026)
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Internal Revenue Service. Employment Tax Due Dates
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Internal Revenue Service. What’s New – Estate and Gift Tax
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Internal Revenue Service. Form 4422 – Application for Certificate Discharging Property Subject to Estate Tax Lien
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Office of the Law Revision Counsel. 26 USC 1445 – Withholding of Tax on Dispositions of United States Real Property Interests
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Internal Revenue Service. Format for Applications
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Internal Revenue Service. Form 8288-B – Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests