Discharge of Federal Tax Lien

This can be a major problem. Here's the typical scenario. You owe taxes and you have major financial problems. You can't pay your mortgage on time or you simply can't pay it at all so you decide to sell your home. You finally find a buyer and the contract to sell your home is finally agreed upon.

Then, a few days before you're ready to close the transaction, your Realtor calls you. The conversation goes something like this....."Bob, Mary, we have a little problem. The title company found a tax lien against you for $25,000. Can you pay this off? You can't? Then the IRS is going to take every penny you were supposed to get and there's not enough to pay them in full. We can't close this sale and if you can't fix this right away, you're going to lose this buyer. Oh, and by the way, if you blow this sale, you still owe me my sales commission, too!"

Think this doesn't happen in real life? Think again. It happens all too often. When it does occur, there is a way out. It's a little known procedure called, a Certificate of Discharge of Property from Federal Tax Lien and comes under section 6325(b) of the Internal Revenue Code.

In a nutshell, here's what happens. The property is sold free and clear of the tax lien That means that the IRS allows a piece of property to which a lien formerly attached to be sold and that properly no longer has a tax lien attached to it. You will still owe the taxes you owed prior to the sale minor the amount the IRS receives from the sale. The buyer will own the home and the lien will not attach to the property.

Sound complicated? It really isn't that bad. Here's the bottom line. You will need professional assistance to handle this transaction. NO Realtor will deal with it, but without it, they don't get paid. NO title company will deal with it, but without it, they don't get their fees. As the seller, you don't have a clue what to do and you'll be in a panic. The buyer will definitely be in a complete panic and with good reason. BUT, you don't have to see the transaction go down the toilet.

There is a significant amount of paperwork that must be put together and the best part is there is NO IRS form to fill out. You have to do it completely on your own. There are instructions, but when you look at them, you'll freak out or pass out, whichever comes first. That's why when you finish reading this, you'll call me at 800.714.1880 and say, "Steve, help me right now." If you try to do it on your own or your Realtor tries to do and it gets completely messed up and you are ready to close and the IRS lien is still in place, I'll charge you double or triple to fix it so don't try this on your own. It's not worth it.

Finally, do not wait until the last minute. We generally need 45 days to get these done. Anything less and we'll have to scramble. As soon as you know there isn't enough to pay off the IRS in full, call me right away.

I've handled as many of these over the past 19 years as anyone in the country. I've NEVER failed to get one through. Every one is different and some are very, very difficult, but they are all "do-able".

Here's what you do. Call me. The price won't be cheap, but it will be fair and without me, your sale will not go through.

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All information is copyrighted by eTaxes.com & Steven H. Kassel, EA 1999 through 2008
Last updated 07/07/2008 04:56:18 PM

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e Taxes.com specializes in Personal & Business IRS Tax Negotiation, IRS Offers In Compromise or "OIC", IRS Installment Agreements, as well as IRS Delinquent Tax, IRS Bankruptcy & IRS Collections Issues, IRS Payroll Taxes, IRS Tax Liens, IRS Wage Levy Release, IRS Bank Levies & IRS Seizures.