Replies to This Discussion

Permalink Reply by Julie Valenzuela on May 8, 2013 at 9:31am

Hello,

You need to start dealing with the IRS in obtaining a partial release. The Escrow officer that is helping you with this short sale can assist you in doing so.

Partial releases do take sometime to get started on it right away. 

Permalink Reply by Kim Eisen on May 8, 2013 at 11:23am

Hi Judith,

 

You usually can get released if you can prove there is no equity in the house for the seller (Section #7 - 6325(b)2(B) on application for property to be discharged has no value).  See below. 

You do have to fill out a form 'Application for Certificate of Discharge of Property from Federal Tax Lien (Form 14135) and provide quite a bit of information and documents. You'll have to fill out the form, but here's some things you'll want to pay attention to below.  It is just following instructions, but when it's new to someone, it can seem overwhelming. I've attached some of the forms. Also, I'm assuming there is no equity.

You can start getting together some of the items you need, but others you may have to wait until the SS is approved and an appraisal is done. The IRS is usually pretty timely doing this but allow up to 3 weeks - I drop off the package right to the correct department or you can mail in once completed.  Once approved they will sent an intent to release the lien to the homeowners, but if you do the last item in the below list, they will email/mail it directly to the title company usually, which is faster.

Things you'll need to submit along with application. My last one was 56 pages, but most of that is the appraisal and the purchase agreement, so don't get overwhelmed. 

1) A copy of the warranty deed to your seller from when they bought it (under #8 - FOR REAL ESTATE - check 'attached' and mark on deed copy 'Section 8' so they know what that copy is for).

2) A copy of an appraisal (either the seller can have one done or you can use the buyers one from the mortgage company)

(under #9 - REQUIRED APPRAISAL - check 'attached' and mark first page of appraisal 'Section 9')

3) A copy of tax records or tax statement that shows the County valuation. (under #9 - PLUS - County Evaluation - check 'attached' and mark it with 'Section 9' on copy)

4) A copy of the purchase agreement (under Section 11)

5) A copy of the Title Insurance Commitment or Title Report for the purchase (Section 12)

6) A copy of the estimated HUD1 (Section 13)

7) A copy of the short sale approval letter (Section 14 is for any pertinent info that can help your request - and I add, if applicable on 1st page the note 'Short Sale Approval to Avoid Foreclosure'.)

8) A copy of (if applicable) Notice of Mortgage Foreclosure Sale (usually received by the foreclosure attorneys) (mark as Section 14)

9) Hardship Letter (Section 14) - no formal form - just written/typed by seller(s) with mortgage bank name and loan #'s. Can use the same one you sent to short sale dept.

10) copy of IRS Notice of Federal Tax Lien Filing that sellers received prior to lien (or something that shows the tax lien info). (Section 14)

11) Authorization to Release Information to Internal Revenue Service with Seller(s) name and Social Security #'s, date of birth, along with the IRS Serial # (that was on the IRS notice of federal tax lien filing). Address of property, Company(s) - your broker and Title Company name (including any of its agents and/or assigns); and, Individuals - Name, responsibility, phone # and email address.  i.e. Mary Smith, Sellers' Closer (555-555-2100) [email protected] .  Put SSI# again under printed name below sellers signature area at end. (Section 14)

12) The IRS will send a letter to seller, but you want them to directly email/mail the title company, so you are going to

add another letter of authorization that says 'RE: Attached Authorization to Release Information form.  If you have any questions for the title/closing company you can contact the closer (mary smith) at (title company name), phone # 555-555-2100, email, if you need to or contact us, the taxpapers.  (have them sign)  - (Section 14).

 

See attached forms (current as 5-8-13)

 

 

 

Attachments:

• Application for Cert of Discharge of Property f14135.pdf, 132 KB
• Instructions to file IRS lien application of Dischargepdf.pdf, 658 KB
• Authorization_To_Release_for IRS - BLANK.doc, 27 KB

Permalink Reply by Kim Eisen on May 8, 2013 at 11:32am

P.S. - I found that usually if the have an IRS lien, they also have a 'STATE' lien, so make sure, cuz you'll have to do that application as well.  We just get a list of what the state wants (very similar things that IRS needs, so you should have everything already).

Sometimes the state will let you email it in, but you'll have to check.  By the time  you have the appraisal, you should have everything else you need ready to go, but don't wait when your at that point, get it in right away.  I just print the application and fill it out (this is a 'work' copy) and print what I know I have (starting a file folder) and highlight the other things I still need to complete. When I add those, then I cross it off on my 'work' copy.  

Permalink Reply by Paula Bachman on May 9, 2013 at 2:24am

I had the same situation, and although it is time-consuming, I got the liens released.  I used the attached IRS forms plus state-specific forms.  Best, Paula

Attachments:

• F14135 Federal Tax Lien Full.pdf, 479 KB
• Federal Tax Lien Discharge.pdf, 132 KB

Permalink Reply by Ben Benita on May 9, 2013 at 6:46am

Kim - next time could you give us a better and more detailed answer!!!

;-)

Kim nailed it, follow her instructions and get started ASAP!!!

The GREAT news - IRS liens have been VERY easy to get removed (not even "settled") in the past.  I think we have done them on 6 separate occaisions, never took more than 3-4 weeks and was relatively simple.

All my best to everyone

Ben Benita

[email protected]

Permalink Reply by Kim Eisen on May 9, 2013 at 7:07am

LOL! Bill - I am detailed  ; )))  I just wish someone would do this for me when I try something new.  Kim

Permalink Reply by Ben Benita on May 9, 2013 at 7:12am

Kim - I know a REALLY good short sale processing company that can help you with that!!!!

www.ShortSaleShop.net

[email protected]

Yes, shameless plug!!!!