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Can I Sell My Home with A Federal Tax Lien?

Napoleon Yancey Aug. 14, 2020

We routinely represent taxpayers in IRS civil tax cases located in Memphis and Jackson Tennessee, North Mississippi, and West Memphis Arkansas. The answer is a resounding yes!

Before going further into the answer, here is a little background on Federal Tax Liens. If you owe the federal government back taxes of any type a federal tax lien automatically arises. At this point the tax lien is not public knowledge; however, if a taxpayer continues to ignore and not pay the debt and their debt is higher then $10,000, the IRS has several tools in its pocket to cause the taxpayer as much distress as possible to try and get them to pay the debt. One of the tools is to issue a notice of federal tax lien. When a taxpayer receives this notice, it lets them know the IRS has made the federal tax lien public. So, if you try to acquire new credit or sell your home, a potential creditor or title company will see the outstanding debt owed to the IRS.

When it comes to selling a home, a lender will not want to move forward with the sale with the federal tax lien in place. But there is a way to still move forward with the sale. The process is to subordinate or remove the federal tax lien. The taxpayer does not need to pay off the full debt to make this happen. The real-estate agent or taxpayer can reach out to a tax professional who will negotiate with the IRS to remove or subordinate its lien position so the sale can be completed.

The main objective of the IRS is to ensure the taxpayer owing back taxes is not enriched by the transaction while still owing the IRS debt. Ultimately, any net gain the taxpayer would have received will go towards paying the outstanding back taxes. If the proceeds of the sale exceed the back taxes, then the taxpayer will get those remaining funds from the sale.

To obtain help removing a federal tax line; have any questions about IRS tax resolution; offers in compromise; or any other IRS issue, please feel free to contact me.