A tax compliance certificate, in the United States, is not one specific document. It’s a general term for any official proof that a person or business has filed required tax returns and paid what’s owed. The IRS and each state’s tax agency issue several different versions depending on why you need the proof: a federal Tax Compliance Report for employment or contracting, a sailing permit for aliens leaving the country, or a state tax clearance certificate for closing or selling a business. Which one you need depends entirely on who’s asking and why.
The IRS Tax Compliance Report
The closest thing the federal government offers to a general tax compliance certificate is the IRS Tax Compliance Report. It’s a letter summarizing whether your returns are filed and your taxes are paid on time. Employers, federal agencies, and banks request it before making hiring decisions, granting security clearances, or approving certain transactions.1Internal Revenue Service. Tax Compliance Report
The IRS issues two versions. Letter 6201 covers individuals and sole proprietors. Letter 6575 covers other businesses. Both summarize your compliance status, list your filing history, and note any federal taxes owed. They also flag late payments over the past four tax years, unfiled or late-filed returns over the past six years, and any civil fraud penalties assessed within the past five years.1Internal Revenue Service. Tax Compliance Report
For federal employment or security clearance purposes, the IRS uses Form 14767 to authorize releasing the report to the requesting agency. The report covers your individual income tax obligations for the four most recent tax periods, any business tax liabilities you’re personally responsible for as a sole proprietor, and unpaid assessed tax debts where the collection statute (generally ten years from assessment) hasn’t expired. The IRS does not release copies of your actual tax return, account transcripts, or details about your income, dependents, or filing status through this process.2Internal Revenue Service. Form 14767, Consent to Disclose Tax Compliance Check
Timing matters when you request the report. Payments take about two weeks to post to your IRS account, and returns take roughly four to six weeks. Requesting the report before recent activity posts can produce a result that doesn’t reflect your actual standing.1Internal Revenue Service. Tax Compliance Report
Tax Compliance for Federal Contracts
Businesses competing for IRS contracts face a mandatory tax compliance check before they can receive an award. Since October 2016, all potential IRS contractors and vendors have been subject to this check, with no minimum dollar threshold. If the IRS identifies an unresolved tax delinquency, the business is ineligible for the contract unless an approved payment agreement is already in place.3Internal Revenue Service. IRM 5.7.9 – Tax Compliance Check for Federal Contracts
For businesses bidding on contracts with other federal agencies, the IRS issues Letter 6575, sometimes called the “tax certificate for award use.” It specifically indicates whether the business has a seriously delinquent tax debt as defined by the Consolidated Appropriations Act of 2019. A business can download this letter for federal contracting purposes through its IRS online account.1Internal Revenue Service. Tax Compliance Report
Sailing Permits for Aliens Leaving the U.S.
Aliens planning a long-term or permanent departure from the United States generally must obtain a departing alien clearance, commonly called a sailing permit or departure permit, before leaving. It’s essentially a compliance certificate proving you’ve settled your U.S. tax obligations.4Internal Revenue Service. Departing Alien Clearance (Sailing Permit)
You get the permit by filing either Form 1040-C (U.S. Departing Alien Income Tax Return) or Form 2063 (U.S. Departing Alien Income Tax Statement) at your local IRS office before you leave. Form 1040-C requires you to report all income received or reasonably expected through your departure date and pay the full tax due at the time of filing, along with any taxes owed from prior years. Payment must be in certified funds: a cashier’s check, certified bank check, postal money order, or cash.5Internal Revenue Service. Instructions for Form 1040-C, U.S. Departing Alien Income Tax Return
Not everyone needs a sailing permit. The IRS exempts several categories:
- Foreign government representatives entering with diplomatic passports, plus household members and accompanying servants.
- International organization employees whose compensation for official services is exempt from U.S. tax and who earned no other U.S.-source income, along with household members who also earned no U.S.-source income.
- Students and exchange visitors on F-1, F-2, H-3, H-4, J-1, J-2, Q, M-1, or M-2 visas who received no U.S.-source income beyond specific exceptions in IRS Publication 519.
- B-1 business visitors who stayed fewer than 90 days during the tax year, B-2 pleasure visitors, C-1 aliens in transit, and similar short-term entrants with no taxable income.
- Canadian and Mexican commuters who cross the border for work and whose wages are already subject to U.S. withholding.6Internal Revenue Service. Topic No. 858, Alien Tax Clearance
State Tax Clearance Certificates
State tax clearance certificates are separate from anything the IRS issues. They come from your state’s department of revenue or equivalent taxing authority and confirm that a business has filed all required state returns and paid all state taxes owed, including income, sales, franchise, and other applicable taxes.
Two situations commonly trigger a state tax clearance requirement. The first is business dissolution or withdrawal. Many states won’t process a Certificate of Dissolution or Certificate of Withdrawal until the business obtains clearance from the state tax authority. At least thirteen states require a withdrawing corporation to present a tax clearance notice with its filing, and several others have their secretary of state coordinate directly with revenue agencies on the business’s behalf.
The second is a bulk asset sale. When someone buys a business’s assets, state bulk-sale laws in many jurisdictions require the buyer, seller, or both to notify the state taxing agency and obtain a tax clearance certificate. Without it, the seller’s unpaid liabilities for sales tax, income tax, payroll tax, and unemployment tax can transfer to the buyer. Most buyers don’t discover that risk until the state comes collecting years later.
Most states issue these certificates at no charge, but processing times and procedures vary. If you’re dissolving, withdrawing, or buying a business, check with every state where the business operated to see whether clearance is required.
What Your Compliance Status Actually Means
When the IRS runs a compliance check, it puts your account in one of three categories. Which one you fall into decides whether you face delays or denials on contracts, employment, or other transactions that rely on your standing.
- Compliant. All required returns filed, all taxes paid. This is what you need for a clean report.
- Noncompliant. You have an overdue return or unpaid tax debt. This generally blocks a favorable compliance report until the issue is resolved.
- Compliance issue. A middle status that applies if you’re paying a balance through an installment agreement, have a history of filing or paying late, received a civil fraud penalty (even if fully paid), or have a balance under administrative or judicial review.1Internal Revenue Service. Tax Compliance Report
The middle category trips people up. Having an installment agreement in good standing does not make you “compliant” for these purposes. Your report will flag the agreement, and the requesting party decides how to weigh it. For federal contracts specifically, an approved payment agreement is generally enough to remain eligible for an award. For other purposes, the requesting authority uses its own discretion.3Internal Revenue Service. IRM 5.7.9 – Tax Compliance Check for Federal Contracts
Fixing a Bad Compliance Result
If a check comes back noncompliant or flagged with a compliance issue, you have to address the underlying problem before the report will change. For unfiled returns, file them. For unpaid balances, pay in full or set up an installment agreement. Then wait: payments take about two weeks to post, returns take four to six.1Internal Revenue Service. Tax Compliance Report
Some things can’t be fully erased. A civil fraud penalty shows up for five years after payment, and a history of late filing or payment appears for up to six years. Neither is an automatic disqualifier, but the requesting agency or employer will see them.
If You Meant Transmitter Control Code Instead
One quick clarification for anyone who arrived here after searching “TCC.” The IRS uses that abbreviation for a Transmitter Control Code, which is a five-character identifier assigned to businesses that file information returns electronically through the FIRE (Filing Information Returns Electronically) system. It has nothing to do with proving your taxes are paid. You need one before you can e-file forms like 1099s, 1098s, or W-2Gs, and any filer submitting 10 or more information returns in a calendar year is required to file electronically.7Internal Revenue Service. About Information Returns (IR) Application for Transmitter Control Code (TCC) for Filing Information Returns Electronically (FIRE)8Internal Revenue Service. Filing Information Returns Electronically (FIRE) If that’s what you need, the IR Application for TCC is the online form to start with; the compliance certificates covered above won’t apply.