I represent taxpayers in the greater St. Louis area and the State of Missouri. A long standing client of mine had to file bankrupcy as a result of his business failing and the home was entangled in the bankrupcy estate.A buyer almost walked away from the purchase of there dream home as a result of a federal tax lien.A big misconception that the lien was going to prevent them buying there dream home. There could be nothing farther from the truth.
Tax liens protect the IRS ablity to be paid in such an instance by blanketing all of a taxpayers assets. What wasn't explained to the buyer was that the home had to be discharged our from under the lien, which then continues to cover the rest of the assets that may exist.
The IRS is always happy to cooperate when there is something in it for them. The goal of the lien is to make sure that IRS is going to get what it is entitled to, not interfere with a transaction that benefits all parties involved.
Here are some simple rules regarding discharging an asset.
1. If the equity in the house pays the tax debt off, the IRS will provide a payoff letter once they receive certified funds. Once that occurs there will be a lien release.
2. If there is insuffient equity to pay off the tax debt, you still can get a lien discharge when providing proof they the IRS is getting all of the equity in the property.
3. If there is no equity, ie short sale the IRS will provide the lien release once it is proven that the sellers won't recieve any equity from the transaction. The HUD statement shows the way the proceeds are going along with the appraisal of the property.
The IRS is like anyone else. They just want to be paid. When IRS procedures are followed the transaction can be quite smooth.
If you or anyone else you know are having IRS or state issues with taxes please feel free to contact me @636-397-2759, (c) 636-866-4554 or email me@ firstname.lastname@example.org
Arch Tax Resolution
Steve Shapiro, EA
620 South Benton
St. Charles, MO 63301