IRS To Help Distessed Homeowners

T
he IRS has announced that it will be providing relief to financially distressed homeowners to avoid having a federal tax lien impair their ability to either sell or refinance their homes.

If a taxpayer has a federal tax lien against his property, and the taxpayer is looking to refinance or restructure his loan, the taxpayer or the taxpayer's representative may request that the IRS make the tax lien secondary to that of the lending institution restructuring or refinancing the loan. For homes being sold for less than the mortgage lien, the taxpayer or its representative may request that the tax lien be discharged. The discharge does not relieve the taxpayer of his responsibility to pay the taxes owed. It merely removes the lien from the property so that it can be sold.

The process to request a discharge or a subordination of a tax lien takes approximately 30 days after the submission of the completed application, but the IRS will work to speed those requests in wake of the economic downturn.

“We don’t want the IRS to be a barrier to people saving or selling their homes. We want to raise awareness of these lien options and to speed our decision-making process so people can refinance their mortgages or sell their homes,” said Doug Shulman, IRS commissioner. “We realize these are difficult times for many Americans,” Shulman said. “We will ensure we have the resources in place to resolve these issues quickly and homeowners can complete their transactions.”

To apply for a certificate of lien subordination, people must follow directions in Publication 784, How to Prepare an Application for a Certificate of Subordination of a Federal Tax Lien. Again, there is no form but there must be a typed letter of request and certain documentation. The request should be mailed to one of 40 Collection Advisory Groups nationwide. See Publication 4235, Collection Advisory Group Addresses, for address information.