Episode 4: In this episode, Timalyn provides information for both the sellers and the buyers who are involved in a real estate transaction with a tax lien. If there is a tax lien on the property, it could cause a significant delay in the sale, but there are options available to help avoid or minimize the delay. Let's join Timalyn to learn more.
Timalyn discusses what a tax lien is and how it could affect you, in Episode 3. If you're trying to sell a house, a tax lien could be a major obstacle. In this market, a seller may be able to realize a significant profit, if they can get the transaction completed.
If you're trying to purchase a home that has a tax lien, Timalyn will address this issue later in the episode (so stick around).
How Do They Know a Tax Lien Is Involved?
It's possible the seller may have forgotten about the lien, or not realized the impact a tax lien can have on the sale of a home. When the title is run in preparation for the sale, a tax lien will show up.
Timalyn comments that the title company, mortgage lender or even the realtor will often recommend the seller simply contact their tax professional. This isn't the best route, because if their tax professional could fix the problem it would already be fixed. All tax professionals do not know how to remove a tax lien.
Tax Lien Basics
If the IRS places a lien on a taxpayer's account the lien is filed at the County Clerk's office and made public record. This informs all creditors (and potential creditors) that the IRS has priority in debt repayment. The IRS will step in ahead of all other creditors. This means a lender may lose their interest in the house if the IRS issues a tax Levy, and seizes the property due to a tax debt.
Ways to Sell Your Home with a Tax Lien
Timalyn recommends contacting the Centralized Lien Office at 1-800-913-6050 to verify the amount of the lien, how much longer the lien will last, and a payoff amount.
Whether you intend to sell or buy the property, you can fill out the Application for Certificate of Discharge of Property from a Federal Tax Lien. You'll need to have specific information, including the amount of equity the seller has in the home.
The IRS will review the amount of the tax lien, the proposed sale price and current equity. This information will help to show the IRS they will be able to get paid, after the sale.
What Is Discharging a Lien?
The IRS may give permission for the sale to happen. A lien discharge removes the lien from one piece of property. When selling a home, the IRS discharges the lien but the taxpayer must still agree to pay them from the proceeds.
What is Lien Subordination?
A lien subordination allows another creditor to step ahead of the IRS. The IRS maintains priority whenever a tax lien exists. However, in certain circumstances, such as with a subordination, the IRS steps aside allowing a taxpayer to obtain a mortgage or other type of loan.
Timalyn Can Handle the Application as POA
When someone decides to hire Timalyn Bowens to represent them in a tax relief matter, Timalyn will be appointed Power of Attorney (POA) to act on behalf of her client. The application and documentation are complicated. Some individuals find it easier to simply let Timalyn handle the process. This Tax POA authority is granted via tax Form 2848.
How Long Does It Take to Get a Federal Tax Lien Discharged?
Timalyn explains that the process typically takes 45 days. You should consider this period, especially if a buyer has already expressed an interest in your property. Time is of the essence. You may want get Timalyn involved as early as possible.
Schedule a Virtual Appointment with Timalyn
If you'd like to speak with Timalyn Bowens about your particular situation, you can sign up for a tax relief evaluation phone call at https://www.bowenstaxsolutions.com/. Look for the blue, Book Now button.
During this call, you and Timalyn will evaluate your issues, determine if it's a good fit, and decide whether or not to work together.
Can You Make a Profit with a Tax Lien?
Yes. It's possible to still walk away with a profit if you sell your home with a tax lien. Timalyn comments that there are companies low-balling offers to sellers when a tax lien is involved. These companies understand sellers often don't understand their options or the process itself.
If you're willing to complete and submit the application, or have Timalyn do it on your behalf, you may still be able to walk away with a profit. You don't have to accept a low-ball offer just because a federal tax lien is involved. You have options. You can empower yourself to move forward with cash, after the sale. You can stay in control of the process.
Can You Refinance Your Home with a Tax Lien?
Yes. If you have equity in your home, Timalyn explains that it may be possible for you to refinance. The mortgage company may have concerns due to the IRS' involvement, but again you have options.
Can I Get a Federal Tax Lien Discharge if I Don't Have a Home to Sell?
Even if you don't own a home, if you have a tax lien, you may have problems trying to get a loan to buy a home. Remember, when the IRS attaches a tax lien, it includes all of your assets. This can include the money in your bank account and 401(k) funds.
It's important to get your federal tax lien removed. Contact the Centralized Lien Office at 1-800-913-6050 to verify the amount of your lien. If it's less than $25,000, you may be able to get it removed via a request for a lien withdrawal. This will require that you make some payments and set up a direct debit arrangement with the IRS before the public notice is removed. This enables the IRS to be paid on a monthly basis.
Back Tax Negotiation Checklist
Timalyn provides a checklist to help you to prepare for negotiations with the IRS. You need to have your facts straight and be prepared. Yes, Timalyn can handle the negotiations for you. Again, you'll want to set up an appointment with Timalyn.
Timalyn explains that a Federal Tax Lien doesn't directly affect your credit score, but it may influence a lender's decision to offer you a loan. If the lien exists, the creditor understands that the IRS would get paid before they do. The denial of a loan based on this will affect your credit score.
A Federal Tax Lien Can Impact Your Business
Interestingly, a Federal Tax Lien on your personal-side can negatively impact your business. For the IRS, they are connected. It may limit or deny your ability to sell business property or to obtain a business loan.
Getting a tax lien removed can provide you some breathing room. In Episode 5, Timalyn will discuss a Federal Tax Levy.
As we conclude Episode 4, we'd like to encourage you to connect with Timalyn on social media . You'll be able to subscribe to this podcast on Apple Podcasts, Google Podcasts, Spotify, and many other podcast platforms.
Remember, Timalyn Bowens is America's Favorite EA. She's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.
For more information about tax relief options, visit: https://www.americasfavoriteea.com/ .
If you have any feedback, or suggestions for an upcoming episode topic, please submit it here: https://www.americasfavoriteea.com/contact
Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.
