If you have fallen into bad financial straits and have gotten behind on your taxes as well, you may be facing bankruptcy, or you may decide to sell your home. If you decide to sell your home and there is a federal tax lien against it, you will run into problems. The government will want to be paid for your back taxes to satisfy the lien before the home can be transferred. You may find that your potential buyer becomes nervous about the transaction and backs out, or that you lose the potential sale. Is there a way to get a discharge of a federal tax lien from personal property? Luckily, yes, there is.
How to Discharge a Federal Tax Lien
If you are selling your home to help pay bills or to free up income to pay off debts, you likely don’t have the money available to pay off a tax lien, without selling your home first. This is a catch-22 situation which can cause problems. However, if you pursue a Certificate of Discharge from Federal Tax Lien, you will be able to sell your home or property and pay off the federal tax debt or pass the lien on to the buyer of the home. This type of discharge is not a well known procedure, but most income tax lawyers can help you set up the necessary paperwork to make it happen.
Essentially, the procedure for a certificate of discharge from federal tax lien works like this:
- You are able to sell your house and the lien is discharged, but
- The IRS will take a portion of the proceeds to satisfy the release of the lien.
- Then you will have to pay the portion of the taxes that you owed to the IRS prior to the release of the lien out of the proceeds of the home sale.
These types of transactions can be difficult to properly negotiate, and the paperwork can be confusing at best. However, this is likely your only option if you are facing a federal tax lien that you need to have discharged.
Getting Help
The process of filing for a certificate of discharge from a federal tax lien usually takes about 45 days from start to finish. There are no specific forms to fill out, but by working with a competent tax attorney or individual who is well versed in the income tax code, you can typically get the procedure done and move on with paying back the IRS and getting on with your life tax debt free.
