As long as the IRS is receiving the full proceeds (other than closing costs) from the sale or refinance of a property, the IRS will usually grant a Lien Subordination. While there is no specific IRS Form for Subordination or discharge of a Federal Tax Lien, the process is very specific. In return, the IRS will require that it receive ALL proceeds in excess of sales costs and amounts due to Lien holders who are a priority to the IRS (the bank that holds your loan, etc…), up to the amount of taxes you owe. By subordinating the Lien, the IRS allows a lender to take a priority interest ahead of any IRS claims on value of the property. Because of this secured interest, prospective banks are not willing to loan money to a taxpayer with a Federal Tax Lien unless they can obtain a security interest superior to that of the IRS Lien. A Federal Tax Lien gives the IRS a secured interest in any property that is subject to the Lien. ![]() ![]() Under this method the delinquent taxpayer is able to secure financing for the purpose of making a payment towards their federal tax liability.
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