Federal Tax Lien Question

[southernbelle]

I have a tax lien from the IRS on my home (luckily it isn't on my credit report). The question is, if I would like to sell my home and haven't resolved this tax issue with the IRS and the lien is still in effect, does the mortgage get paid off prior to any proceeds going to the IRS to satisfy the lien? If that statement is true, what happens to the balance of the lien amount if the sale doesn't fully satisfy both the mortgage and the federal tax lien?

Assuming I will purchase another home after the sale, does the balance of the lien get transferred to the new home?

Does the IRS's lien need to be satisfied first, prior to the mortgage?

[StartingOver08]

As far as I am aware, you have to deliver clear title and in order to do so either the lien must be satisfied at or before closing.

I do not know if the IRS will accept a short payoff and make a new lien in the amount of your new balance. That is a good CPA/tax attorney question.

As to the lender accepting a short payoff with the IRS lien behind them - probably not.

[southernbelle]

Thank you for your response. Based on your answer, it makes me wonder if the lien is so large that it couldn't be satisfied by the sale of the home then what does the IRS do? Are you stuck with the home indefinitely or do you allow it to get foreclosed on and the IRS ends up with little or nothing anyway?

I'm with you on the fact that (without consulting a CPA or tax atty) it seems as if the original mortgage (lien holder) would come first, then the IRS, but I don't know for sure. I was wondering about this since the equity in my home was insufficient for both and one day I might want to move. Thank you.

Thanks again. Food for thought.

[Minnymouth]

This is a good topic for debate.....

Who RULES??? Who gets paid 1st??? First lien holder or IRS????

Also, if the home goes into foreclosure, does the first lien holder get all the money he's owed from the sale and the IRS - do they have to write it off??

Also, since its taxes, can the IRS transfer the lien to something else the owner has or buys in the future? They can seize your check, so why not put a lien on your auto, etc. and garnish your wages.

I would think that Federal over rules any company, but it is a 2nd lien when standing in line.

INTERESTING...........................

[fltoo]

The tax lien must be satisfied before the sale of the house. Normally, there was enough equity to satisfy the lien and the mortgages, but times.... they are achanging.

The taxpayer and/or lender certainly may approach the IRS about putting the lien in secondary position so that the house can be sold.

Make sure you keep up your property taxes, because prop taxes not paid are another can of worms.

[southernbelle]

Just in case anyone was interested, I went to the IRS website and here's what I found:

Part 5. Collecting ProcessIRS Speeds Lien Relief for Homeowners Trying to Refinance, Sell

[wilson9975]

Hi,

I have read in one of the books that Basically IRS lien is to be satisfied first almost under any circumstances.Your credit scores and rating are of course deeply harmed. So it is very important to obtain IRS lien release. Again once it is filed, you can't remove a lien from your credit reports. Normally IRS issues a Release of the Notice of Federal Tax Lien within either- 30 days after you pay the tax due, plus interest and fees that state and/or county charges to file and release the lien - 30 days after IRS accepts a bond that you submit, guaranteeing payment of the debt.