Over the past 18 months, many hardworking people and businesses have suffered economic losses through no fault of their own. Some have failed to file tax returns or even pay their taxes. During the pandemic, the IRS temporarily ceased collection activity. Due to increased funding and a need to pay for some government actions, the IRS is ramping up their collection efforts. Using a myriad of techniques including artificial intelligence (AI), the IRS is identifying and pursuing high income (over $100,000 income) non-filers. The IRS is a collection agency, they have many tools at their disposal, the most effective of which are liens and levies.
So, what happens when your client’s assets are encumbered by a Notice of Federal Tax Lien, and they want to sell their house?
Take a deep breath and look at the reason your client got into this situation. Most likely, the IRS records show your client has an outstanding federal tax debt that has been ignored for too long.
Not everyone is perfect including the IRS, you can’t just accept what the IRS says, the outstanding tax debt needs to be investigated and verified. Once the debt is verified, your client will need to get into compliance with the IRS. Any outstanding tax returns (lookback 6 years) will need to be filed and quarterly estimated tax payments must be current. Then and only then, will your client and/or their representative want to approach the IRS to discuss the release of the federal tax lien.
Remember, the IRS is trying to collect an outstanding tax debt. Is it in their best interest to hold up a sale? Not if the government can collect some or all of the debt. It will take work but, in many situations, the IRS will work with your client and or their representative to resolve the matter.
Most people find it very stressful to talk to the IRS, they hire a representative. The IRS will only work with Attorney’s, CPAs, and Enrolled Agents. A Minneapolis CPA (https://resolvetaxissues.com/about/) with over 35 years of experience, I have filed many tax returns and represented numerous clients before the IRS (https://resolvetaxissues.com/services-page/tax-resolution/). I can help your clients as well. If you have a client in this situation have them call my office, I will be happy to assist.