Federal Tax Lien: What Options Are Available For You?
When your home has a federal tax lien, it makes it nearly impossible to sell or refinance it. It’s important to keep in mind that a lien does not mean the IRS will seize your home, but you are still responsible for paying it. There are several ways you can remove it and sell your home, and the first step is understanding what a lien is.
What Is an IRS Tax Lien?
The IRS states that a federal tax lien is “the government’s legal claim against your property when you neglect or fail to pay tax debt.” This debt includes failed or neglected payments for taxes, such as property or income tax. The lien’s primary function is to protect the government’s interest in your personal property, financial assets, and real estate. You receive a lien after the IRS calculates how much you owe, sends you a notice and bill for that amount, and you fail to pay it.
How can I pay off a lien?
There are a few ways to pay off your lien. The first and simplest is to pay your debt back in the full amount. Other options to reduce or pay it off include the following:
• Subordination. This method allows other creditors, aside from the IRS, to move ahead of the IRS lien. This can be done once you prove to the IRS your willingness to pay the lien through your home equity or the savings you have on a newly refinanced mortgage.
• Withdrawal. If you enter into an agreement to partially or completely pay off the lien at a set amount of time, the IRS will have the public notice of federal tax lien withdrawn. By doing so, the IRS ensures no other creditors will be competing for your property. A lien may be withdrawn once you pay your taxes in full.
• Discharge of Property. When a homeowner sells their home for less than what the lien amount is, they can request that the IRS discharge the amount only if it is to complete the sale.
Contact Us For a Consultation
If a tax lien has been filed in your name and on your property, we can advise you on which options are best for you and your financial situation. Contact us anytime for confidential consultation.
We look forward to helping you sell your house and get rid of your IRS tax lien!
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