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Successfully Transfer Real Estate With An IRS NFTL On Title

Services for Real Estate Pros with d/b/a TAMCO Capital Accounting & Finance BK #3055515

So you get a title report in and find an IRS Notice of Federal Tax Lien (NFTL) in public records that encumbers the seller’s assets. In a state of panic you realize that this $1.3 million dollar closing next month is in serious jeopardy. You need help to fix this IRS problem like yesterday.

Unfortunately, settlement agents and closing attorneys will see more of this in the near future not less. It’s critical to be proactive now and form relationships with specialized tax resolution experts. A target has been placed on the assets of high-income taxpayers by the IRS and they intend to collect by any means necessary.

 Why now? Part of it relates to COVID-19 and how it slowed IRS enforcement activity because offices closed. A larger factor, however, is a report issued May 29, 2020, by the Treasury General for Tax Administration (TIGTA). It suggested that wealthy taxpayers fail to file returns with intent, thereby resulting in a cash flow shortfall of $37 billion from 2011 through 2013 to the US Treasury. Willful failure to file a tax return is not taken lightly by the nation’s largest (and most effective) collection agency. Failure to file and failure to pay penalties are being assessed in earnest and they are meant to inflict pain 

Here’s why a NFTL assessment gets filed in the first place. 

Wealthy taxpayers are often 1099 business owners. They are busy people and it’s very easy to fall into the trap of putting tax matters on the back burner when dealing with day-to-day operations. Months turn into years until procrastination triggers an insurmountable compliance nightmare. The debt becomes so huge that it can lead to bankruptcy.

Section 6321 of the Internal Revenue Code (IRC), creates an automatic statutory lien against the assets of a delinquent taxpayer once the IRS makes an assessment of taxes due and then issues a demand for payment. A NFTL is not required to be filed for a silent lien to exist. If the seller owes more than $10,000, then the IRS will file a NFTL to perfect its lien by putting other creditors on notice. It also gets them paid when all else has failed. Be aware though that the lien is created automatically when the taxpayer receives a demand for payment and fails to settle or appeal the assessed balance due within the time frame for doing so.

 An NFTL on title is a good indicator that the property owner has ignored IRS notices for several months, if not years.  

 To save a deal with an NFTL on title requires professional skill and care. Speed in execution is the key to fixing the underlying issue. If you don’t have an IRS enrolled agent who specializes in tax resolution in your contact list, then you need to find one now. Not every EA or CPA has the specialized training to represent a seller’s case to remove an NFTL from title. It’s a fool’s errand to waste time chasing promises made by every 1-800 big box tax relief firm out there.  Seller’s are often embarrassed by this disclosure and have fragile egos. When time is of the essence, this is not the time to “shop” for help. An on-going relationship with a trustworthy contact, before you need help, is worth it’s weight in gold. 

Our team of specialized EAs and tax attorneys have a better than 90% success rate of resolving complex tax matters like removing a NFTL. It’s important to let the seller know upfront that IRS compliance is the first step towards effective negotiations. Our firm has a formal referral program for settlement agents, real estate professionals, and closing attorneys that saves your referrals 30% off our fee to remove the lien and settle the matter with the IRS. As a federally authorized tax practitioner, we represent clients before the IRS and e-File missing personal and business returns that are eligible to do so. Our accountants are certified in QuickBooks and can help clean up company books and records regardless of the software. We help taxpayers remain compliant going forward as a prerequisite to long-term asset protection.

Discharging a NFTL takes time. Put your seller in contact right away with a reputable IRS resolution professional that you can trust. Our firm is BBB accredited and based in the Orlando, FL metro area. If you are local, book a time to chat. Unlike a CPA, an IRS enrolled agent can provide assistance discharging NFTLs in all 50 states. We also handle NFTL subordination that will make your refinance lender smile. Contact me for an honest assessment of your unique situation.