Tuesday, January 5, 2010

IRS Tax Lien? Selling Real Property?

If you or someone you know is selling real property, and there is an IRS tax lien in the way, there is a specific process to be utilized.

A Certificate of Discharge Application is imperative if one is planning on selling or buying real property. Whether the IRS tax lien covers the full amount of equity in the property, part of it, or none, it is still important to notify the IRS of the transaction. If something gets missed, you or someone you know may purchase property with a Lien still in place (hard to believe but I have seen it happen before).

Most recently, we assisted a taxpayer who had a lien for approximately $150,000. The property was selling for $150,000, but the selling proceeds were being split 3 ways, 2 parties did not have any tax liens, one did. Therefore, with all the appropriate paperwork required by the Internal Revenue Service in, the IRS discharged the tax lien to allow the sale of property to take place, 1/3 of the proceeds to go to the IRS and the remainder to go to each seller.

This process can be complicated and if there is a document missing, it can delay processing. Much like the subordination process, the IRS typically takes 30 days to finalize an application. Therefore, it is imperative to get an early jump on the application and make sure follow up's are completed with each appropriate party. As always, feel free to call me concerning this process at it can be a time consuming, lengthy, and complicated one.