Terry, you are under 6325(b)(2)(A) “The United States receives an amount not less than the value of the United States’ interest.” The United States interest is the taxpayer’s equity. So there is no escrow needed, just send in the 14135 with all the closing documents (HUD breakdown of sales proceeds, contract, appraisal, etc) and state the IRS will receive the equity available. They will send a letter that states upon receipt of a certified check for the amount of the net sales proceeds they will release the property from its lien so the purchaser can get clear title.
