What Is a TCC Certificate? IRS, State, and Contract Uses

In the United States, there is no single federal document called a “tax compliance certificate.” The phrase is a catch-all for several different verifications that you have filed your returns and paid what you owe, and the right one depends on why you need it. The IRS issues a Tax Compliance Report for employment, security clearance, and banking checks; a related letter for businesses bidding on federal contracts; and a sailing permit for aliens leaving the country. States issue their own tax clearance certificates, usually for dissolving a business or buying its assets.

Below is what each document does, who needs it, and how to get it.

The IRS Tax Compliance Report

The closest thing the IRS offers to a general tax compliance certificate is the Tax Compliance Report. It’s a letter that summarizes whether you’ve filed your returns and paid your taxes on time. Employers, federal agencies, and banks sometimes request one to verify your standing before making hiring decisions, granting security clearances, or approving certain transactions.¹

There are 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.¹

For federal employment or security clearance purposes, the IRS uses Form 14767 to authorize disclosure of 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 any unpaid assessed tax debts where the collection statute hasn’t expired (generally ten years from the date of assessment). The IRS does not release your actual tax return, account transcripts, or details about your income, dependents, or filing status through this process.²

Timing matters. If you recently filed a return or made a payment, wait before pulling your report. Payments take about two weeks to post to your IRS account. Returns take roughly four to six weeks. A report requested too early may not reflect what you’ve already done.¹

Tax Compliance for Federal Contracts

Businesses competing for IRS contracts go through a mandatory tax compliance check before they can receive an award. Since October 2016, all potential IRS contractors and vendors are subject to this check, and there is 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.³

For contracts with other federal agencies, the IRS issues Letter 6575, sometimes called the tax certificate for award use. This letter specifically indicates whether the business has a seriously delinquent tax debt as defined by the Consolidated Appropriations Act of 2019. A business can download it for federal contracting purposes through its IRS account.¹

Sailing Permits for Departing Aliens

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. The permit shows that you’ve settled your U.S. tax obligations.⁴

You get one by filing either Form 1040-C (U.S. Departing Alien Income Tax Return) or Form 2063 (U.S. Departing Alien Income Tax Statement) with your local IRS office before you leave. Form 1040-C requires you to report all income received or reasonably expected during the tax year through your departure date and pay the full tax shown as due at the time of filing, along with any taxes owed from prior years.⁵

Not everyone needs a sailing permit. The IRS exempts several categories:

Foreign government representatives entering with diplomatic passports, plus their 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 described in IRS Publication 519.
Business visitors on B-1 visas who stayed fewer than 90 days during the tax year, visitors for pleasure on B-2 visas, aliens in transit on C-1 visas, and similar short-term entrants who received no taxable income.
Canadian and Mexican residents who frequently cross the border for work and whose wages are already subject to U.S. withholding.⁶

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 tax returns and paid all state taxes owed, including income, sales, franchise, and other applicable taxes.

Two situations commonly trigger the requirement. The first is business dissolution or withdrawal. Many states will not 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 the secretary of state coordinate directly with the revenue agency 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 clearance certificate. Without that certificate, the seller’s unpaid tax liabilities for sales tax, income tax, payroll tax, and unemployment tax can transfer to the buyer.

Most states issue these certificates at no charge, though processing times and procedures vary. If you’re dissolving, withdrawing, or buying a business, check with every state where the business operated to determine whether clearance is required.

What Your Compliance Status Means

When the IRS runs a tax compliance check, it assigns your account one of three statuses:

Compliant. You’ve filed all required returns and paid all taxes due.
Noncompliant. You have an overdue return or an unpaid tax debt. This will generally prevent a favorable report until it’s resolved.
Compliance issue. A middle-ground status. It 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.¹

The middle category catches people off guard. Having an installment agreement in good standing does not make you “compliant” for these purposes. Your report will flag it, 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 has discretion.³

Fixing a Noncompliant Result

If your check comes back noncompliant or flags a compliance issue, the fix depends on the underlying problem. For unfiled returns, file them. For unpaid balances, pay in full or set up an installment agreement. Then allow time for the change to register: payments take about two weeks to post, returns four to six.¹

If you need an accountant or attorney to help resolve the issue, you’ll need to grant them access to your tax information. Form 8821 (Tax Information Authorization) lets you authorize someone to inspect and receive your confidential tax information. Form 2848 (Power of Attorney) goes further and authorizes a qualified representative to act on your behalf before the IRS. Both can be submitted online, by mail, or by fax.⁷⁸

Some issues won’t fully clear. A civil fraud penalty shows up for five years even after it’s paid, and a history of late filing or payment appears for up to six years. These won’t necessarily block you from getting what you need, but the requesting agency or employer will see them.

Unresolved Tax Debt and Your Passport

One consequence of unresolved federal tax debt that catches people off guard is passport action. If you owe more than $66,000 in legally enforceable federal tax debt, including penalties and interest, the IRS can certify your debt to the State Department, which may then deny your passport application, refuse to renew your passport, or revoke your existing one. The threshold adjusts annually for inflation.⁹

Certain debts don’t count toward that threshold. If you’re paying through an installment agreement and current on payments, or paying timely under a settlement offer, those amounts are excluded. Debts where collection has been suspended because you’ve requested a hearing or filed an innocent-spouse claim are also excluded. If the IRS does certify your debt, paying in full or entering an approved payment plan will generally lead to reversal of the certification.

If You Were Looking for a Transmitter Control Code

The IRS also uses the abbreviation “TCC” for something unrelated to tax compliance verification. A Transmitter Control Code is a five-character alphanumeric identifier assigned to businesses filing information returns electronically through the FIRE system. Any business, fiduciary, or government agency that files 10 or more information returns for a calendar year is required to file electronically, which means obtaining a TCC first.¹⁰¹¹ If that’s what you’re looking for, the IR Application for TCC is where to start; the compliance documents above won’t help.

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Internal Revenue Service. Tax Compliance Report
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Internal Revenue Service. Form 14767, Consent to Disclose Tax Compliance Check
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Internal Revenue Service. IRM 5.7.9 – Tax Compliance Check for Federal Contracts
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Internal Revenue Service. Departing Alien Clearance (Sailing Permit)
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Internal Revenue Service. Instructions for Form 1040-C, U.S. Departing Alien Income Tax Return
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Internal Revenue Service. Topic No. 858, Alien Tax Clearance
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Internal Revenue Service. About Form 8821, Tax Information Authorization
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Internal Revenue Service. About Form 2848, Power of Attorney and Declaration of Representative
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Internal Revenue Service. Revocation or Denial of Passport in Cases of Certain Unpaid Taxes
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Internal Revenue Service. About Information Returns (IR) Application for Transmitter Control Code (TCC) for Filing Information Returns Electronically (FIRE)
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Internal Revenue Service. Filing Information Returns Electronically (FIRE)