IRS Lien on Home I just Sold

[Susie_B]

This is my very first time here and I am so glad I found this place. This is my dilemma, a home which I owned was sold this week with a gain of more than 300K. I also owe the IRS over 50K on back taxes going back 12 years. For years now, I've been on a monthly plan set up by the IRS where the agree payment is taken directly out of my bank acct. I was told that there is a way for me to settle with the IRS, and I was also told that after 10 years anything I owe the IRS is erase but I don’t know if this is true.

That said, the escrow company told me that the IRS has a lien on my property and that the title company is keeping over 100K from the sales of my home until the lien is taken off by the IRS.

What is the best way to approach the IRS so they can take the lien off? I figure that the moment I mention that the house was sold they will want their cut but since I am on a set monthly plan with them will that reminds the same and they will take off the lien? If that doesn't work, is there a way for me to pay ½, or less to settle with the IRS what I owe them first without mentioning that my home was sold and how long that may take?

Will a tax attorney or CPA will be the best person to help me with this, or someone in this forum has the right answers where I can do it on my own as well?

Thanks so much to all of you.


Susie

 

[Taxing Matters]

In this situation the IRS will only release the lien (if the lien is fully paid) or do a certificate of discharge (which would remove that one asset from the lien when the lien is not fully paid) if the IRS gets its share of the sale proceeds. If there is enough from the sale to pay off the IRS in full after paying any liens senior to the IRS then that is what the IRS will demand — full payment. You can't expect to get cash out this sale if the IRS doesn't get fully paid. You can contact IRS collections or the lien unit to determine how much it would take to fully pay the liabilities and get the lien released.

 

[Susie_B]

Thanks for your great answer. I will contact the IRS now. Hope that part of the IRS has been reopen. What about what I was told, that any taxes still owed after 10 years is waived?

 

[Taxing Matters]

Thanks for your great answer. I will contact the IRS now. Hope that part of the IRS has been reopen.

The government shut down is over, at least for now. But employees are returning to work over a period of days and it remains to be seen how quickly the IRS will return to full normal operation. All you can do is call and see if you can get the info now. If you can't then maybe you'll need to wait a few days.

What about what I was told, that any taxes still owed after 10 years is waived?

The general rule is that the IRS has in most cases 10 years from the date the tax was assessed to collect it. So if Amy filed a return for 2010 on June 15, 2018 and the IRS then assessed the tax from that return on July 30, 2018 the IRS would have until July 30, 2028 to collect what Amy owes on that return.

There are several exceptions, however, that will extend the time the IRS has to collect. One of those exceptions allows the IRS more time to collect if the taxpayer signs a waiver of the statute of limitations (SOL) in connection with an installment agreement (IA). If the IA you were granted would not fully pay the liability before the SOL were to run out then the IRS employee who worked on the IA was supposed to get you to sign that waiver. It may have been included within the IA documents you had to sign. Look over your IA documents (hopefully you kept all of them) and see if there is waiver extending the SOL in there somewhere.

 

[davew9128]

IRS liens are self releasing upon expiration of the collection statute unless they are refiled, which is rare. An IRS collections rep could tell you when the statute expires, and the lien itself can be seen in your county's court or register of deeds. Whomever is handling the sale is required to remit the amount shown on the lien to the IRS.

 

[Taxing Matters]

Whomever is handling the sale is required to remit the amount shown on the lien to the IRS.

That part is not accurate as written. There is no part of the Internal Revenue Code (IRC) that imposes such a liability, nor does any other federal law. But once the IRS has filed notice of its lien any buyers of the taxpayers property are on notice of the lien and they risk losing the property in an IRS seizure and sale if the lien is not released or least removed from that particular property. And it is not the amount stated on the lien that matters as that figure is not a current computation of what is owed. Knowledgeable buyers don't want that risk so when they go to closing they are going to insist the lien be dealt with at or before closing such that when everything is concluded that property is no longer burdened by the lien. So while there is no legal requirement on the part of the person handling the closing to ensure sufficient funds are set aside in the sale to satisfy the lien, pretty much any independent broker or title agent handling the sale will do just that to ensure the buyers are getting what the contract says they are to get: a property unencumbered by any liens of the seller.