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Home tax liens to get special attention

The IRS does have heart! Yesterday, the agency announced that it is instituting an expedited process to help remove tax liens from the homes of financially struggling owners.

We're all too aware of the troubles faced by folks who are about to lose their homes. Some laws have been enacted to help these folks out. However, it's also no big secret that when people run into money trouble in their daily lives, they're also likely to run into tax trouble, too.

Tax lien text These strapped homeowners face a double burden. They're about to lose their home and the primary creditor is the IRS, which has slapped a lien on the property.

Now, says IRS Commissioner Doug Shulman, his agency is looking to help keep such folks from losing their residences. The IRS is expediting its processes by which it can subordinate or discharge tax liens against these properties.

"Clearly, these are difficult times for the U.S. economy," said Shulman in announcing the revised IRS policy. "Many homeowners are at risk of losing their homes. The IRS is doing whatever it can under the constraints of law to avoid getting in the way of people trying to refinance or sell their homes."

Getting second in line: With subordination, the IRS essentially relinquishes it's spot at the top of the collection line. This should help folks refinance or restructure their loans. Without the IRS moving over, most lenders -- OK, all lenders -- won't issue a loan. They naturally want to make sure that they get first crack at repayment of money that is secured by the property.

Getting totally out of the way: With lien discharge, the IRS will remove the claim on the property. Whoa up there, cowboy. That's not exactly what it sounds like.

In certain cases, the IRS will remove the lien on a property. But that doesn't mean the delinquent taxpayer is off the hook. It just means the person has gone, finally, to the IRS to make payment arrangements or the agency has opted to place a lien on some other real or personal property, or the person's wages, in order to stake its claim to the overdue tax bill.

The IRS now is giving special attention to discharges for homeowners since such action could help folks who are, for example, trying to sell their home for an amount that is less than its outstanding mortgage. While someone might well be ready and willing to snap up such a house from the distressed sellers, the title won't clear with the lien on the property.

Asking for IRS lien help: If you want a certificate of lien subordination, follow the directions in Publication 784, How to Prepare an Application for a Certificate of Subordination of a Federal Tax Lien.

For a certificate of discharge of a tax lien, follow the instructions in Publication 783, Instructions on How to Apply for a Certificate of Discharge of a Federal Tax Lien.

In both instances, you must submit a typed letter of request and certain documentation. Then mail your request to one of the 40 Collection Advisory Groups nationwide. Publication 4235 has address information.

It usually takes around 30 days after a request for the IRS to process a discharge or subordination. Now, however, the IRS is looking to speed up that time frame.

"We want to process these so that it won't delay a closing or sale," said Fred Schindler, director of IRS Collection Policy. "If time is short, the goal is to get through the process as quickly as possible. We are increasing our staffing, working as quickly as possible, but it is hard to give you a firm time table. We will do our best."

You can read more on the IRS effort in this announcement, as well as at Eye on the IRS (my tax blog over at Bankrate.com); Wall Street JournalAssociated Press; and San Francisco Chronicle.


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Tax Debt Relief

tax lien is a lien imposed by law upon a property to secure the payment of taxes. A tax lien may be imposed for delinquent taxes owed on real property or personal property, or as a result of failure to pay income taxes or other taxes.

irs tax attorney

A tax lien is a lien imposed by law upon a property to secure the payment of taxes. A tax lien may be imposed for delinquent taxes owed on real property or personal property, or as a result of failure to pay income taxes or other taxes.

surveys online

Well this is really an issue. And it's something to get worried about. Our home/house is our investment.

Mike Habib


Mike Habib

Tax Liens are effective for a period of ten years and are generally self-releasing after that period unless refiled by the IRS in which case, it shall be effective for another 10 years. More Info.


Tax Lien investors are welcome to visit the national association of tax lien investors website for free information on tax liens. All of the information available is free.

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