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IRS tax lien on short sale

Posted by Pacita C Dimacali on December 28, 2013 at 11:20am in Short Sale Discussions

Need advice......

I have an upcoming short sale listing with an IRS tax lien on it.

The property value is around $550K. But loans are around $700K. Owner tried to refinance but obviously failed due to negative equity. It got worse when he got slapped with a tax lien. In November, he received Notice of Default.

Is it possible to have the lien withdrawn? The tax lien is $93K. What can he do?

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Replies

  • Sam December 31, 2013 at 4:10am

    They will accept a BPO from a local agent...I have done quite a few and if you follow their instructions to a "t", the process is surprisingly smooth.

    • Pacita C Dimacali > Sam December 31, 2013 at 9:25am

      Thank, you Sam.

      This is very good and helpful information

  • Jonathan Katz December 30, 2013 at 8:12am

    Pacita,

          I've had many IRS liens discharged on numerous short sales. It's important for your client to know that it will be a partial release of lien unless they actually make an offer to settle in full.  Ensure to work on the IRS lien release package package to be submitted which includes a title report, all lien holder approval letters, an appraisal, an additional value, and some IRS forms. It's important to have the time frames lined up properly as you don't want to be in closing and just starting/learning how to have the IRS lien removed.

    If you have any questions, please don't hesitate to reach out to me as my door is always open.

    Brett@ishortsalenow.com

    310-564-6389

    www.ishortsalenow.com

    • Pacita C Dimacali > Jonathan Katz December 30, 2013 at 8:41am

      Thanks, Brett

      Working on the IRS package now. Already have the preliminary title report. They're asking for a formal appraisal --- so I'm hoping they will waive that until the buyer has one done once an offer is accepted and the short sale is approved. 

      Otherwise, we'll focus on getting the short sale approved first and make sure we have all the paperwork handy for submission.

      Thanks.

  • Pacita C Dimacali December 29, 2013 at 10:36am

    Thanks, Bryant

    I was hoping there are success stories from people who were able to get this done.

    I had supplied this info to my client, and even provided him with a form. Also encouraged him to see the nearest Citizen Advisory Group which is in Oakland. 

    Every bit of information helps :)

    I found a link to more information....http://www.irs.gov/uac/IRS-Speeds-Lien-Relief-for-Homeowners-Trying...

    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.

     

  • Bryant Tutas December 28, 2013 at 10:48pm

    Hi Pacita. The IRS can remove the lien so they can close on the property. Here's how to do it....

    http://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/Un...

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