Tax Negotiation | Tax Liens | Tax Lien | IRS Tax Liens

Liens give the IRS a legal claim to your property as security for payment of your tax debt.

"IRS Speeds Lien Relief for Homeowners Trying to Refinance, Sell"

"WASHINGTON — The Internal Revenue Service today announced an expedited process that will make it easier for financially distressed homeowners to avoid having a federal tax lien block refinancing of mortgages or the sale of a home.

 

If taxpayers are looking to refinance or sell a home and there is a federal tax lien filed, there are options. Taxpayers or their representatives, such as their lenders, may request that the IRS make a tax lien secondary to the lien by the lending institution that is refinancing or restructuring a loan. Taxpayers or their representatives may request that the IRS discharge its claim if the home is being sold for less than the amount of the mortgage lien under certain circumstances.

 

The process to request a discharge or a subordination of a tax lien takes approximately 30 days after the submission of the completed application, but the IRS will work to speed those requests in wake of the economic downturn.

 

“We don’t want the IRS to be a barrier to people saving or selling their homes. We want to raise awareness of these lien options and to speed our decision-making process so people can refinance their mortgages or sell their homes,” said Doug Shulman, IRS commissioner.

 

“We realize these are difficult times for many Americans,” Shulman said. “We will ensure we have the resources in place to resolve these issues quickly and homeowners can complete their transactions.

 

” Filing a Notice of Federal Tax Lien is a formal process by which the government makes a legal claim to property as security or payment for a tax debt. It serves as a public notice to other creditors that the government has a claim on the property.

 

In some cases, a federal tax lien can be made secondary to another lien, such as a lending institution’s, if the IRS determines that taking a secondary position ultimately will help with collection of the tax debt. That process is called subordination. Taxpayers or their representatives may apply for a subordination of a federal tax lien if they are refinancing or restructuring their mortgage. Without lien subordination, taxpayers may be unable to borrow funds or reduce their payments. Lending institutions generally want their lien to have priority on the home being used as collateral.

 

To apply for a certificate of lien subordination, people must follow directions in Publication 784, How to Prepare an Application for a Certificate of Subordination of a Federal Tax Lien. Again, there is no form but there must be a typed letter of request and certain documentation. The request should be mailed to one of 40 Collection Advisory Groups nationwide. See Publication 4235, Collection Advisory Group Addresses, for address information.

 

Taxpayers or their representatives may apply for a certificate of discharge of a tax lien if they are giving up ownership of the property, such as selling the property, at an amount less than the mortgage lien if the mortgage lien is senior to the tax lien. The IRS may also issue a certificate of discharge in other circumstances if the taxpayer has sufficient equity in other assets, can substitute other assets, or is able to pay the IRS its equity in the property. Without a tax lien discharge, the taxpayer may be unable to complete the home ownership change and the ownership title will remain clouded.

 

To apply for a tax lien discharge, applicants must follow directions in Publication 783, Instructions on How to Apply for a Certificate of Discharge of a Federal Tax Lien. There is no form but there must be a typed letter of request and certain documentation. The request should be mailed to one of 40 Collection Advisory Groups nationwide. See Publication 4235 for address information.

 

The IRS also urges people to contact the agency’s Collection Advisory Group early in the home sale or refinancing process so that it can begin work on their requests. People sometimes delay informing lenders of the tax liens, which only serves to delay the transaction.

 

Currently, there are more than 1 million federal tax liens outstanding tied to both real and personal property. The IRS issues more than 600,000 federal tax lien notices annually."
IR-2008-141, Dec. 16, 2008
Announcement taken from: http://www.irs.gov/newsroom/article/0,,id=201343,00.html

 

 

Is the IRS taking a bite out of your personal property or real estate deal?

 Notice of Federal Tax Lien Liens give the IRS a legal claim to your property as security for payment of your tax debt. A Notice of Federal Tax Lien may be filed only after:

 

* The IRS has assessed the liability;

* The IRS has sent you a Notice and Demand for Payment - a bill that tells you how much you owe in taxes; and

* You neglect or refuse to fully pay the debt within 10 days after we notify you about it.

 

Once these requirements are met, a lien is created for the amount of your tax debt. By filing notice of this lien, your creditors are publicly notified that the IRS has a claim against all your property, including property you acquire after the lien is filed. This notice is used by courts to establish priority in certain situations, such as bankruptcy proceedings or sales of real estate.

 

The lien attaches to all your property (such as your house or car) and to all your rights to property (such as your accounts receivable, if you are a business).

 

Caution! Once a lien is filed, your credit rating may be harmed. You may not be able to get a loan to buy a house or a car, get a new credit card, or sign a lease. Therefore it is imperative that you call us immediately. We can help you to resolve your tax liability as quickly as possible, before a lien filing becomes necessary.

 

Payoff Amount

The full amount of your lien will remain a matter of public record until it is paid in full, including all accruals and additions. However, at any time an updated lien payoff amount may be requested showing the remaining balance due.

 

You can call us and we can help you obtain a current amount almost immediately. Obtaining this information as quickly as possible can sometimes be critical when you have a piece of real property in escrow.

 

Applying for a Discharge of a Federal Tax Lien

If you are giving up ownership of property, such as when you sell your home, you may apply for a Certificate of Discharge. Each application for a discharge of a tax lien releases the effects of the lien against one piece of property. Note that when certain conditions exist, a third party may also request a Certificate of Discharge. You can Refer to Publication 783, Instructions on How to Apply for a Certificate of Discharge of Property from the Federal Tax Lien or you can let us do it for you and save you a lot of difficulty.

 

Making the IRS Lien Secondary to Another Tax Lien

In some cases, a federal tax lien can be made secondary to another lien. That process is called subordination. Refer to publication 784 (PDF), How to Prepare Application for Certificate of Subordination of Federal Tax Lien. Again this is something our experts are prepared to handle for you.

 

Withdrawing Tax Liens

By law, a filed notice of tax lien can be withdrawn if:

 

* The notice was filed too soon or not according to IRS procedures,

* You entered into an installment agreement to pay the debt on the notice of lien (unless the agreement provides otherwise),

* Withdrawal will speed collecting the tax, or

* Withdrawal would be in your best interest (as determined by the Taxpayer Advocate), and in the best interest of the government.

 

The IRS will provide you a copy of the withdrawal, and if you write to the IRS,they will send a copy to other institutions you name.

 

Appealing the Filing of a Tax Lien

The law requires the IRS to notify you in writing not more than 5 business days after the filing of a lien. They may give you this notice in person, leave it at your home or your usual place of business, or send it by certified or registered mail to your last known address. You may ask an IRS manager to review your case, and you may request a Collection Due Process hearing with the Office of Appeals by filing a request for a hearing with the office listed on your notice. You must file your request by the date shown on your notice.

 Some of the issues you may discuss include:

 

* You paid all you owed before we filed the lien,

* The IRS assessed the tax and filed the lien when you were in bankruptcy, and subject to the automatic stay during bankruptcy,

* The IRS made a procedural error in an assessment,

* The time to collect the tax (called the statute of limitations) expired before theIRS filed the lien,

* You did not have an opportunity to dispute the assessed liability,

* You wish to discuss the collection options, or

* You wish to make spousal defenses.

 

At the conclusion of your Collection Due Process hearing, the IRS Office of Appeals will issue a determination. That determination may support the continued existence of the filed federal tax lien or it may determine that the lien should be released or withdrawn. If you disagree with Appeal's determination, there is a 30-day period starting with the date of determination, in which you may request judicial review in a court of proper jurisdiction. Refer to Publication 1660 , Collection Appeal Rights, for more information.

 

 Call (877) ETAX-FIX (382-9349) and avoid the hassle of trying to figure it out yourself.